Wealth Management
While rising interest rates might make things difficult for life insurance company risk managers, they were great for individual fixed annuity sales in the fourth quarter of 2022. According to new issuer survey data from Wink, overall sales of all types of deferred contracts increased 30% between the fourth quarter of 2021 and the fourth quarter of 2022, to $79 billion. Sales of three types of products classified as fixed, traditional fixed annuities, non-variable indexed annuities, and multi-year guaranteed annuity (MYGA) contracts — climbed 102%, to $58 billion. Sheryl Moore, Wink’s CEO, told ThinkAdvisor that MYGA contracts in particular benefited both from increases in crediting rates and consumers’ fear of market volatility. She noted, “Eighteen percent of insurance companies offering MYGAs experienced at least triple-digit sales increases over the prior quarter.” In fact, MYGA contracts jumped 217% to $36 billion, non-variable indexed annuities rose 28% to $22 billion, and traditional fixed annuities increased 18% to $575 million. Wink based the latest annuity sales figures on data from 18 index-linked variable annuity issuers, 48 variable annuity issuers, 51 traditional fixed annuity issuers, and 85 multi-year guaranteed annuity (MYGA) issuers.
Finsum:According to new issuer survey data from Wink, rising interest rates helped sales of all types of deferred contracts rise 30% year over year in the fourth quarter of 2022, to $79 billion.
Advyzon Investment Management, a turnkey asset management program, announced at the recent T3 Advisor Conference, that the firm is launching its new model marketplace called Nucleus. Nucleus will be fully integrated into the comprehensive, award-winning Advyzon platform built on single source code. Lee Andreatta, CEO and co-founder of Advyzon Investment Management stated, "We're extremely excited to announce the launch of Nucleus, something that has been in the works since we launched AIM in Spring 2022. Adding a model marketplace enhances AIM's TAMP offering and moves Advyzon closer than ever to offering a fully comprehensive solution for financial advisors and investment managers to run their firms." Andreatta and his colleague John Mackowiak, Chief Revenue Officer for Advyzon, shared the news during their T3 main stage session, 'If You Think Your Tech Stack Is Optimized, Think Again: The Benefits of a Comprehensive Solution'. The Nucleus model marketplace is structured for unified managed accounts (UMAs) and will include sleeve-level reporting and trading. Financial advisors will have access to third-party strategists offered in two ways to help their businesses. The first is Advyzon traded, with advisor-built UMAs or pre-set UMA portfolios built by AIM incorporating strategist sleeves and the second is Advisor traded, with Nucleus access available in Advyzon's Quantum Rebalancer – a powerful, in-house trading and rebalancing tool seamlessly integrated into Advyzon's cloud-based platform.
Finsum:Advyzon Investment Management, a turnkey asset management program, recently announced that it is launching its new model marketplace called Nucleus, which is structured for UMAs and will include sleeve-level reporting and trading.
According to a FINRA enforcement executive at Sifma’s recent Compliance and Legal Conference, the regulatory body is planning to complete at least 1,000 Regulation Best Interest exams of broker-dealers by year's end. Bill St. Louis, executive vice president and head of FINRA's National Cause and Financial Crimes Detection Program, said “That will mean that by year-end just under one-third of FINRA’s 3,300 member firms will be examined for compliance with Reg BI, the Securities and Exchange Commission’s retail advice rule, which went into effect on June 30, 2020.” While FINRA has been examining Reg BI violations since the rule went live, officials have exclusively reported violations in industry-wide notices such as the 2023 FINRA Report on Exam and Risk Monitoring Program, instead of seeking enforcement actions against firms or reps. However, according to FINRA officials, “a year and a half after Reg BI went live, the enforcement gloves are coming off.” Christopher Kelly, FINRA’s acting head of enforcement, said, “A number of the firms that have been warned still haven’t remedied the [violations] the examiners…warned them about, so those will often result in referrals to enforcement.” St. Louis added that FINRA is taking a hard look at variable annuities and has at least one Reg BI enforcement in the works dealing with conflicts surrounding the contracts.
Finsum:After a year and a half of warnings, the gloves are coming off for FINRA as they plan on examining just under one-third of FINRA’s 3,300 member firms for compliance with Reg BI.
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While many ESG investors are drawn to the appeal of helping the environment with their investments, the two-year rally in oil and gas stocks has become too much to ignore. The energy sector has led the market for two years rising 135% in 2021 and 2022 compared with a 2.2% gain in the S&P 500 Index. Analysts expect the sector to jump another 22% in 2023, despite its 5.8% decline so far, according to data compiled by Bloomberg. ESG firms have taken notice. Rockefeller Capital Management takes pride in its ESG investing record. While the firm’s larger portfolio follows multiple strategies that include ESG and non-ESG, its $19 billion equity portfolio now has a 6% energy weighting. This is even more than the S&P 500’s energy weighting of 4.8%. Plus, clients in Rockefeller’s wealth management arm, which is separate from its asset management arm, have almost tripled their holdings in Chevron Corp. In fact, the stake’s value has quintupled to $251 million over two years. Their clients have also been buying tens of thousands of shares in Brazilian oil producer Petroleo Brasileiro SA, Diamond Offshore Drilling Inc., and several other S&P 500 Energy Index members, including Exxon Mobil Corp. and APA Corp.
Finsum:With a massive two-year run, and a strong return expected this year, energy stocks have attracted clients of firms such as Rockefeller Capital Management that take pride in their ESG investing record.
One of the biggest challenges for financial advisors is growing your client base. Rebecca Lake, CEPF recently penned an article for SmartAsset providing strategies on how to get more clients. According to Lake, the first step is to know your audience. Knowing whom you want to serve can help shape your marketing efforts in appealing to your ideal client. This can include demographics such as age range, marital status, children, and average annual income. Lake also recommends niching down in terms of your advisory services. This can help grow your client base by focusing on a smaller number of potential clients and offering a specialized service that they're seeking. Lake notes that the smaller the niche, the “greater the opportunity you have to grow your client base if you're one of only a handful of advisors who are meeting the needs of that market segment.” The next strategy is to fine-tune your brand. This can include a good logo, especially when it's linked to a catchphrase or slogan. Next, networking with other individuals in the financial services community can boost your visibility. The final strategy is to leverage your existing clients by asking for referrals, which can be a highly effective way to get new clients, but make sure to frame the ask carefully.
Finsum:Rebecca Lake wrote an article for SmartAsset on how to grow your business, including strategies such as knowing your audience, finding a niche, fine-tuning your brand, networking, and asking for referrals.
With many economists predicting an economic downturn, investors may wonder how ESG investments will perform in a major recession. To find the answer, Portfolio Adviser asked a cross-section of industry commentators for their views. According to Max Richardson, senior director, of wealth planning at Investec Wealth & Investment, research on ESG performance during recessions is limited, but available studies suggest mixed results. For instance, a study by MSCI found that ESG stocks outperformed traditional ones during the 2008 financial crisis, with a lower decline in stock prices and a faster recovery. However, a study by the London School of Economics found that ESG stocks performed no better or worse than traditional stocks during the 2008 crisis. In fact, the impact of the crisis on ESG stocks was largely dependent on the specific industries and companies, not their ESG status. Amanda Sillars, fund manager and ESG director at Jupiter Merlin believes funds that exclude entire sectors on ESG grounds, which are typically oil, gas, miners, and defense, "run the risk of delivering weak absolute performance if those sectors outperform.” In contrast, “Fund managers who retain a broad investment universe and select companies that generate strong cashflows, minimal debt and are valued cheaply, while keeping company engagement at the heart of their investment strategy, are likely to fare better during a recession.
Finsum:According to a wealth planner, studies on ESG performance during a recession are mixed, but a fund selector believes that managers who focus on engagement and not exclusion will fare better in a recession.