Displaying items by tag: advisors

In an article for InvestmentWeek, Jeffrey A. Johnson, the head of Fixed Income at Vanguard,  discusses why there is opportunity for investors in active fixed income funds. He sees attractive valuations coupled with elevated yields. However, he warns that more volatility is likely given that central banks aren’t yet finished raising rates. 

According to Johnson, periods of volatility are when active fixed income really shines. Further, he believes investors can increase their odds of success with active investing by selecting funds with qualified and capable management teams in addition to low costs. 

Over the long-term, most active funds fail to beat their benchmarks. The story isn’t so simple in fixed income given that active managers can take advantage of different durations and credit quality that aren’t available to passive funds. 

Given the challenges of active management, Vanguard recommends a blend of active and passive funds. Although, it favors active management during periods of volatility and uncertainty. In contrast, passive funds offer predictability and lower costs, while active funds offer a higher degree of risk and reward. 

Finsum: According to Vanguard, the outlook for active fixed income funds is improving. The asset class tends to outperform during periods of volatility and economic and monetary uncertainty. 

In a piece for AdvisorHub, Karmen Alexander covers the latest developments in First Republic’s wealth management unit following the regional bank’s bankruptcy. The majority of the beleaguered bank’s assets were acquired by JPMorgan, but many of its financial advisors are choosing to move to new firms. 

Overall, the general trend seems to be that the advisors with the most assets are moving to an independent model. One exception is Mark Alibrandi and Stephen Alibrandi who are joining UBS’ Private WEalth Management unit, taking an estimated $1.5 billion in assets and a total of $5.1 million in annual production. Both Alibrandis had been with First Republic for over a decade and were ranked #8 by Forbers for best wealth advisors in Massachusetts. 

This move came on the heels of Shannon McAllister also exiting First Republic for UBS with around $1.3 million in assets earlier in June. While UBS is recruiting brokers in the New England area away from First Republic, NewEdge Wealth, a hybrid brokerage and advisory firm, was successful in recruiting John Froley in California. Froley was ranked as the #62 advisor in California by Forbes and has $309 million in assets under management.  

Finsum: First Republic was acquired by JPMorgan. Yet, many of the companies’ wealth advisors are leaving the bank for greener pastures.

In an article for Morningstar, Sheryl Rowling discusses a conundrum facing many financial advisors - how to grow their practices without compromising on providing personalized attention to clients. After all, client service is the foundation for any successful practice and sacrificing this in the pursuit of growth can lead to higher rates of turnover and dissatisfied clients. 

One recommendation is to set up systems to ensure constant communication with clients. For instance, many advisors commit to responding to any client inquiries within 24 hours with the type of communication customized to client preference. Additionally, advisors can create a quarterly piece of content like an email newsletter or a letter, providing general updates on a client’s financial plan and keep them updated about financial markets and other important information.  

Another recommendation is to invest in creating an effective online presence. While this requires an upfront investment in terms of time and money, it will create longer-term efficiency in terms of marketing and client recruitment. Thus, growth can be achieved without compromising on service. 

Hiring an assistant or operations person who either specializes in back office tasks, marketing, or customer service can also be helpful and lead to additional time savings. Many advisors continue to wear many hats and don’t spend enough time on the tasks that move the needle for their firm. By hiring for specialized roles, advisors will have more time to focus on the key tasks that drive success whether it's more personal time with clients, portfolio management, or generating leads. 

Finsum: Every financial advisor faces a similar challenge. They want to grow their practice but not compromise on client service which is integral to long-term success.  

In an article for InvestmentNews, Gregg Greenberg discusses findings from Cerulli Edge’s latest report on the asset and wealth management industry. One of the most alarming takeaways is that there is a trickle of new advisors entering the industry with the vast majority failing to stick.

Overall, more are exiting the industry via retirement or quitting than entering. Last year, the number of advisors increased by only 2,579. And, the failure rate for newer advisors was 72%. 

Due to these findings, Cerulli made some recommendations on how practices can attract fresh talent to the industry. Most new advisors enter the industry through referrals while lacking any sort of experience in financial services. 

Thus, it’s imperative that firms have a structured training program that allows new advisors to learn the industry to gain confidence and experience. One of the barriers that new advisors face is the challenge of building their own client book. Thus, an effective training program should equip advisors with the skills and knowledge to successfully build their own book. It should also come with a natural progression from operational and support roles into production and portfolio management especially as compensation is tied to the latter two categories. 

Finsum: The Financial advisor industry is facing a long-term challenge with a lack of new entrants into the field, a high failure rate, and a looming wave of retirements. 

In an article for Wealth Management, Iraklis Kourtidis discusses how the investment industry needs to evolve in order to reduce risk and improve returns. Essentially, it tends to look at the past to make assumptions about the future, specifically regarding correlations between asset classes. 

He believes that too much time and energy is spent on discussing how investments have performed in the past which doesn’t make sense in a world with efficient markets. Instead, investors and advisors need to pay more attention to the future. And, this is even more important with the advent of direct indexing.

Kourtidis believes there are better questions to ask with direct indexing such as will these investments adhere closely to my values? Another is will this strategy properly weigh the tradeoffs between tracking errors, tax efficiency, and personal values? Finally, investors and advisors need to determine whether the additional cost and effort of direct indexing will yield better results than a traditional approach, specifically in terms of tax benefits?

These are forward-looking questions that do have answers unlike questions about the market’s direction, monetary policy, or portfolio returns. Overall, direct indexing means that investors need to consider a different set of questions. 

Finsum: Direct indexing creates an entirely different set of opportunities and challenges for investors and advisors. Here are some things they need to consider that they wouldn’t with traditional investin