Displaying items by tag: advisors

The number of new advisors is not keeping up with retirements and attrition. According to Cerulli, the number of new advisors only increased by 2,706 in the previous years. This is troubling given that the firm projects that nearly 110,000 advisors will be retiring over the next decade. 

This amounts to nearly 38% of all advisors and 41% of total assets. These numbers and trends highlight the need for the industry to do a better job of attracting and retaining fresh talent. The crux of the issue seems to not be recruitment but that there is a 72% rookie failure rate. Some recommendations are growing and nurturing a talent pipeline, better communication of the role and responsibilities of a financial advisor, and a more structured training program which entails ramping up responsibilities.

Ideally, newer advisors would start in roles focused on operations and improving the practice before shifting into a producer role. Cerulli recommends that seniors advisors’ team with new advisors and provide them with experience in engaging with clients and gathering assets before they transition to more independent roles. It notes that many advisors who build successful, long-term careers were the recipients of such mentorship and guidance at the start of their careers. 

Finsum: 2023 was another year of poor recruitment figures for the financial advisor’s industry. Here are some recommendations on improving the success rate of new advisors. 

For investors with unhurried time horizons, patience holds untapped potential. Unburdened by short-term needs, they can explore long-term investments and cultivate portfolio diversification beyond conventional assets. Traditionally, accessing alternative strategies like private equity or direct ownership meant navigating high minimums and limited accessibility.

Enter interval funds, a unique bridge between open-ended and closed-end structures. Unlike exchange-traded closed-end funds, interval funds offer periodic redemption windows, providing measured liquidity while pursuing less-liquid assets. This opens doors to previously exclusive (and sometimes higher risk) strategies, such as real estate investments, infrastructure assets, and private credit.

By incorporating these diverse allocations, their advisors can enhance portfolio resilience and reduce correlation to traditional assets, bolstering overall risk management. Additionally, interval funds often carry lower minimums compared to direct alternatives, democratizing access for a broader investor base.

Naturally, interval funds come with unique considerations. Redemptions occur only during predefined windows, necessitating careful planning. Shares may trade above or below net asset value, impacting entry and exit points. Also, advisors and investors should carefully consider any fund’s management fee, complexity, and performance-tracking aspects during their vetting process.

Ultimately, interval funds offer a valuable tool for advisors to unlock diversification for clients with long-term investing horizons.

Finsum: Find out how financial advisors can take advantage of their clients’ longer time horizons by using interval funds to provide greater diversification. 

Expertly managing investments is crucial, but what truly sets exceptional financial advisors apart is fostering peace of mind. While algorithms excel at navigating markets, understanding the human dimension – your clients' hopes, fears, and aspirations – requires a different kind of expertise.

Peace of mind doesn't solely stem from stellar returns; it comes from knowing you have a confidante who understands your unique circumstances and offers sound, impartial advice.

How do you find the time to cultivate this connection when portfolio management is a full-time job? One option is to consider model portfolios: professionally managed options offering efficient diversification, transparency, and robust reporting. By outsourcing this task, you free up valuable time to focus on what truly matters – your clients.

Instead of being bogged down by portfolio construction, dedicate yourself to empathy, understanding, and building personalized solutions. Ask probing questions, acknowledge their emotions, and tailor your recommendations to their unique needs and values.

Remember, clients seek a partner who navigates the emotional terrain of financial planning with compassion, expert guidance, and a genuine interest in their well-being. By strategically prioritizing connection and leveraging technology, you can become an indispensable source of peace of mind, the most valuable asset any advisor can offer.

Finsum: Learn how model portfolios can enable advisors to reach the ultimate goal of helping their clients achieve peace of mind.

Artificial Intelligence (AI) is disrupting how businesses operate in multiple ways. Advisors should embrace this technology, because it can help create more efficiency by handling routine tasks, freeing up more time and energy for high-value tasks. It can be particularly valuable in terms of managing the practice.

Some considerations include figuring out which parts of the business can be enhanced with AI and which should remain in the purview of an advisor. Another is that proper training in these tools is necessary in order to ensure that they are being properly used. 

An example of how the technology is already being leveraged to improve practice management is through the use of AI note-taking applications. Prior to this, advisors (or a staff member) would take notes during the meeting which can be distracting and detract from cultivating engagement. These apps can essentially transcribe and summarize the conversation which means advisors can stay in the moment and give full attention to the client.

Then, these summaries and notes from client interactions can be integrated into the customer relationship management (CRM) software. Thus, these notes can be used by the practice to provide a richer experience for clients by methodically following up on all relevant matters. AI can also help discover insights and identify action steps that need to be taken. 

Finsum: AI is the latest disruptive technology that will certainly impact multiple aspects of an advisors’ practice. Here is how it can be used to improve a practice’s operations. 

Retirees have many options when it comes to generating income from their portfolios. Each approach comes with its own tradeoffs in terms of yields, risk, and liquidity. In recent years, fixed indexed annuities have become increasingly popular as they generate higher returns than traditional investments, while offering protection during periods of poor market performance.

Fixed indexed annuities are issued by insurance companies. It provides a guaranteed return while also earning additional interest based on the performance of a specific index such as the S&P 500. Like most annuities, they also allow for tax-free compounding. 

One of the major advantages of a fixed indexed annuity is that it reduces the downside risk of a decline in markets which can be more damaging to retirees. Research shows that these products deliver strong returns over long periods of time, although they do underperform during booms. 

If an investors’ goals are to generate more income while reducing the overall risk in the portfolio, then a fixed indexed annuity is a prudent option. When determining whether a fixed indexed annuity is the right choice, a major factor is what it will be replacing in the portfolio. 

Finsum: A fixed indexed annuity can help investors generate more income from their portfolios while also reducing risk. Downsides are less liquidity and underperformance during periods of strong market performance.