The Security and Exchange Commission just issued a slew of new regulatory changes that would impact current trading standards. New changes could come into vote if they have majority support among the five commissioners and two others. Chairman Gensler stated he wants the public and markets to have fair material information. Essentially there is no public disclosure form when a plan to schedule share purchases takes place which can ultimately give insiders an advantage on the trading block. The research in academia has confirmed these trades are more beneficial in the ability to avoid losses inside a 60-day window.

FINSUM: These changes could lead to substantially less stock buyback plans in the coming years as insiders could face more symmetric returns.

Investors need to be more active with their finances and taxes as they enter retirement because it's not the time to coast as many presume. One of the areas retirees underestimate the costs of retirement and permanently puncture their safety net is in healthcare. Hefty premiums hit most Americans due to the Affordable Care Act once you hit 50, and most Americans who retire before Medicare will face a shocking bill. There are lots of healthcare tax credits available for those with low and middle incomes, and bigger benefits if healthcare costs breach 7.5% of adjusted income. Finally, Roth conversation ladders will dramatically impact your healthcare costs.

FINSUM: It’s critical to be informed about all of the tax benefits those approaching or entering retirement can take advantage of pre-Medicare.

Over 500 institutional investors were surveyed and one of the top 5 most important themes going into 2022 is active management in areas like fixed income markets. A combination of factors are leading to more investment but broadly speaking, it is uncertainty which is having investors leaning into active management. On top of this, active management is preferred as the best strategy in risk management overall. A majority of those surveyed believe high fluctuation in inflows and outflows to passive funds put the market in a more systemically risky position. Despite a dragging start to 2021, 70% of investors said their active funds outperformed passive ones.

FINSUM: Picking stocks is always hard, but increased volatility could give pickers an edge.

There is a growing interest among investors, particularly when it comes to retirement, in annuities. Nearly 4/5ths of investors have interest in annuities but as few as 10% of retirement plans offer them. Things are changing at fidelity however, as they are giving the opinions for a guaranteed income direct plan if your employers pick it up. And it seems more employers will be taking on annuities in part of their 401k coverage given the 2020 Secure Act which eased the legal burdens on companies when picking up annuity coverage. Additionally Fidelity is giving the option of naming a beneficiary to your annuity which will curb the biggest concern among investors.

FINSUM: Most Americans aren’t saving enough for retirement and for those retiring sooner rather than later an annuity is a more secure bet given market turmoil.

Diversity, Equity and Inclusion approaches are key parts of finding new financial advisor talent in today's world. Comments at the CFP Board by Akeiva Ellis stressed that firms evaluate their DEI policies and procedures, and more importantly the culture if they want to hire and retain employees. Executives at T. Rowe Price have emphasized plans for advancement within the company as a strategy to retain employees. Specific step by step paths that allow them to know their metrics and execute are the best way to retain and attract talent. Finally, underserved groups don’t often have the same access to the personal feedback that allows them to flourish so specific habits surrounding performance are critical for keeping diverse talent.

FINSUM: DEI is becoming a critical part of recruitment and retention, and an edge up could provide the strongest advisors in the market. 

Jerome Powell and the Fed turned a 180 this week with the future of its asset tapering and interest rate hikes. The Fed sees Covid and omicron as yesterday's demons and have set their sights on inflation. With that the Fed is gearing up for potentially three rate hikes in 2022 and is moving away from the transitory inflation story. This could be bad for bond investors as the Fed’s tune could change if omicron picks up or inflation shifts gears, meaning there is a lot of uncertainty about future rates. Nonetheless, higher rates could undercut existing long term bonds so those still invested in bonds should consider switching their investments to shorter duration Fixed Income ETFs or less sensitive corporate bonds. Lower duration bond ETFs will be more stable when there is interest rate uncertainty (unlike in standard times).

FINSUM: The Fed could just as quickly hop off the inflation fighting hawk train if they get a series of lower PCE reports, which means investors need to be ready for various scenarios.

The environmental, social, and governance investment trend continues on a full head of steam as Goldman Sachs and BNY Mellon both launched a series of new ETFs aligning with different ESG objectives. Goldman launches a Large Cap equity ETF which tracks companies aligned with the new Paris Climate Agreement. Meanwhile BNY Mellon drops three new active ESG ETFs: the first will invest in over 80% sustainable U.S. equity, the second geared towards global markets, and the final will target emerging markets. These are just the latest as both Ark and JPMorgan created two new ESG ETFs as well in the last week. Some of the newer ETFs are following in the Euro area trend of specific disinvestment from companies reliant on C02.

FINSUM: The best part of all the new ESG focused products is the way they can be added that complement an existing portfolio: lacking large cap, pick up an ESG focused large cap ETF.

Biden recently made his pick for a critical new position at the DOL: head of the Employee Benefits Security Administration. Lisa Gomez has been nominated and is likely to get bipartisan confirmation. Gomez is seen as critical to the redrafting of the fiduciary rule that is taking place at the DOL. Most industry insiders expect the new version of the fiduciary rule to be much tougher, more akin to the original Obama era rule than the currently in-effect Trump version.

FINSUM: The reality is that if a critical new person is being brought on board to lead the effort, it is likely to push back the timeline, or so says Brad Campbell, leading regulatory lawyer at Faegre Drinker, a leading law firm in our space.

Direct and Custom Indexing is swallowing up the financial world interests like ETFs have over the last 20 years, but this new trend isn’t without its drawbacks, specifically for retirees. Most investors will utilize direct indexing to weed out stocks they don’t want or minimize their tax burden, Lawrence Tint formerly of BGI voiced some critiques of custom indexing. Tint believes the tax advantage over traditional indexing is minimal because of the turnover in the funds. Additionally direct indexing will have higher fees and even if brokers don’t charge for fees investors will incur the bid-ask spread costs. Finally, direct indexing will make it very hard for income investors to reinvest dividends in a way to mirror the existing or custom index, and the more custom the index the more likely the traditional problems of stock pickers will riddle the custom portfolio.

FINSUM: These drawbacks to direct indexing provide a more complete view of the pros and cons to the financial trend, but it still has a leg up in tax loss harvesting over traditional ETFs.

Model portfolios allow the feel of tailored experience with the ability to hit wider audiences by addressing the specific risks, features or scenarios investors are concerned about. WisdomTree has been a leader in model portfolio development by providing options across diverse assets such as equity, fixed-income, strategic multi-asset, growth oriented, and dividend options. On top of this they build out scenario focused funds.Their fixed income funds are focusing on shorter duration quality bonds while dipping into alternative credit. They have also developed a variety of international funds that focus on developing countries in order to meet the needs of investors worried the U.S. equity market is too overvalued.

FINSUM: Model portfolios are giving advisors a strong option for targeted concerns that face their clients like volatility and inflation.