Displaying items by tag: advisors

Tuesday, 26 March 2024 18:15

Fintech is Reshaping Advisor Recruiting

Commonwealth Financial Network has forged a strategic alliance with Succession Link, a specialized fintech platform focusing on M&A and succession planning, to revolutionize practice management. Through the integration of Succession Link's bespoke solution, advisors can now seamlessly identify compatible continuity and succession partners. 

 

The imperative for advisor succession planning is underscored by Cerulli Associates, forecasting the retirement of 100,000 advisors overseeing $10 trillion in client assets within the next decade.

 

Commonwealth's consolidated platform not only streamlines access to practices for sale but also furnishes advisors with valuation tools, fostering succession planning activity. Succession Link's suite of features, including compatibility scoring and advanced messaging functionalities, aligns with the overarching goal of empowering financial professionals to navigate succession challenges adeptly.


Finsum: Technology tools will be changing the game in advisor recruiting as demographic shifts begin to hit the industry.

 

Published in Bonds: Total Market
Thursday, 21 March 2024 12:05

UBS Late to Wealth Management M&A

This time last year, UBS was embarking on its takeover of the distressed Credit Suisse. Understandably, this slowed its pursuit of other M&A targets. However, the bank is now ready to target larger wealth management firms.

UBS CEO Sergio P. Ermotti recently spoke at the Morgan Stanley European Financials conference. He sees the bank targeting US wealth managers for acquisitions in an effort to boost the profitability of this division. His goal is to narrow the gap between UBS and its rivals following a 72% decline in the unit’s Q4 earnings. 

However, many are skeptical about UBS’ strategy given the aggressive moves made by competitors in the last few years. According to Larry Roth, the managing partner at RLR Strategic Partner, “UBS could be late to the M&A party, which already has significant, well-run firms that are having success in this area.” Further, attractive targets are likely to have multiple bidders and rich valuations. 

Another concern is that there is no guarantee that these large acquisitions will work. A recent example is UBS’ attempted purchase of Wealthfront for $1.4 billion in January 2022 with the intention that it could help the bank recruit Wealthfront’s younger clients. The deal was scrapped by regulators and shareholders. 

Acquisitions are essential for UBS to fuel growth, given its challenges in retaining talent. UBS's advisors generate more than $1 million in average annual revenue and fees. This makes them an appealing target for RIAs or independent broker-dealers with more earnings potential. 


Finsum: UBS is betting on a more aggressive M&A strategy to bolster its US wealth management division. Yet, many believe that the bank’s efforts may not succeed given higher valuations for attractive targets and recruiting challenges.

Published in Wealth Management

As interest rates remain higher for longer, borrowers are increasingly turning to an alternative source of funding: private credit. These arrangements benefit both sides of the transaction; lenders receive higher returns than traditional loans, and their clients get a source of financing with the flexibility to meet their unique needs.

 

With alternative asset managers packaging their private credit investments to accommodate smaller account sizes, this asset class is showing up more in investors' portfolios.

 

This product proliferation gives investors key advantages that are hard to find elsewhere. Private credit typically has a low correlation to stocks and bonds, which are often the mainstay of an investor's portfolio. It also provides an opportunity for higher returns than more traditional debt instruments.

 

Private credit's advantages, diversification and higher returns, come at a cost. These funds can be less liquid than traditional investments, and the return, as with most investments, is not guaranteed.

 

However, private credit may be an asset class to consider for investors with a time horizon that allows them to put a portion of their account in less liquid investments and who desire a chance at higher returns.


Finsum: Read how private credit offers investors the opportunity for greater diversification and higher returns than more traditional forms of debt investments.

 

Published in Wealth Management

Diamond Consultants recently completed the 2023 version of its Advisor Transition Report to identify the most important trends in financial advisor recruiting. Overall, recruiting was up 7.5% compared to 2022 which was unexpected given several headwinds. Many advisors who switched reported being more focused on the long-term to find the best place to maximize the value of their practice on a 5 to 20 year horizon.

 

Another interesting finding is that each channel seems to have a big winner. LPL enjoyed the most success from independent firms, while Morgan Stanley was the winner from traditional wirehouses. Boutique and regional firms like Rockefeller, RBC, or Raymond James also notched some major wins as they offer many of the resources of the large wirehouses without the bureaucracy. 

One catalyst for the increase in recruiting activity has been the expected involvement of private equity bidders. Yet, this hasn’t materialized in terms of PE-backed RIAs poaching talent from legacy players. One factor is that PE offers come with some caveats that make it less appealing to advisors. 

Finally, the lure of the independent channel seems to be fading despite the number of options increasing. This is likely due to traditional firms offering more generous compensation packages while the initial cohort of recruitees who wanted an independent channel have already moved firms. 


 

Finsum: Diamond Consultants put together its 2023 report on advisor transitions. Major takeaways are that recruiting remained strong despite some major headwinds and that PE buyers haven’t been successful in luring advisors. 

Published in Wealth Management

Natixis conducted a survey of 500 investment professionals, managing a combined $35 trillion in assets. The survey showed that investors are adjusting their allocations in expectations of more volatility in 2024 due to more challenging macroeconomic conditions. 

 

A major change in the survey is increasing preference towards active strategies as 58% noted that active outperformed passive for them in 2023, and 63% believe active will outperform this year. Overall, 75% of professionals believe that being active will help in identifying alpha in the new year. 

 

In terms of fixed income, 62% see outperformance in long-duration bonds, although only 25% have actually increased exposure due to uncertainty about the Fed. In addition to increasing duration, many are interested in increasing quality with 44% looking to increase exposure to investment-grade corporate debt and US Treasuries. 

 

Money continues to flow to alternatives with 66% believing that there will be significant delta between private and public market returns. Within the asset class, fund selectors are most bullish on private equity and private debt at 55%. 

 

With regards to model portfolios, 85% of firms now offer them either in-house or through third-party firms. Due to increasing demand, the number of offerings are expected to increase. Benefits include additional diligence and increased odds of client retention during periods of uncertainty. They also help form deeper relationships with more trust between advisors and clients, leading to more of a relationship focused on comprehensive, financial planning. 


Finsum: Natixis conducted a survey of 500 investment professionals and found that model portfolios are increasingly popular. Another major theme is that volatility is expected to remain elevated in 2024 due to uncertainty about the economy and Fed policy. 

 

Published in Wealth Management
Page 1 of 94

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…