Displaying items by tag: advisors

In an article for SmartAsset, Eric Reed discussed how artificial intelligence tools will affect financial advisors. Clearly, it’s hard to definitively predict how the technology will evolve, but it will have the most immediate impact on improving the customer experience. Already, chatbots are capable of engaging with customers, booking appointments, and dealing with administrative issues. For instance, advisors could use a chatbot to immediately respond to customers to low-level inquiries. This would result in more time for advisors to spend on higher-value issues. 

Beyond customer service, AI tools can also be an asset in terms of portfolio construction and research. AI will allow advisors to leverage considerable computing power to discover opportunities in the market and provide more insight to clients. 

For instance, AI can allow advisors to scrape and process massive amounts of data to deliver customized recommendations. This type of analysis can also be applied to a clients’ financial situation, inputting such items like income, spending habits, demographics, and risk tolerance. 

AI tools are bound to disrupt nearly every industry on the planet. Financial advice is no different. As of now, the main benefit is that it will provide additional value to clients, while allowing advisors to focus on higher-value work.

Finsum: AI is a disruptive force, and advisors need to embrace it. Currently, these tools can help with low-level tasks, data analysis, and enable advisors to spend more time on high-value tasks. 

In an article for ETFTrends, James Comtois laid out the 2 major benefits provided by direct indexing as opposed to investing in index funds. Until recently, direct indexing was only available to ultra high net worth investors. Now, it’s increasingly available to a wider swathe of investors.

Direct indexing allows investors to gain the benefits of index investing such as low costs and diversification but allows for greater customization and reduction of taxes. With direct indexing, tax losses are harvested on an interim basis and can be used to offset gains.

According to Morningstar, about $260 billion has moved into the category as of the end of 2022. And, this trend is only expected to strengthen in 2023. 

According to Morningstar, “Investing directly in the underlying stocks of an index in lieu of a mutual fund or ETF tracking the same benchmark allows for individually tailored tax management.” Another factor cited is that it allows investors to modify indexes based on their specific values to account for environmental, social, or governance factors. Additionally, investors can prioritize any specific factor they want to emphasize such as value or growth. 

Finsum: Direct indexing has seen massive growth over the last couple of years as it’s become increasingly available to a wider clientele. Two major benefits are a lower tax bill and increased customization. 

In an article for InvestmentNews, Jeff Benjamin reported on Morningstar’s decision to allow competing model portfolios from other asset managers on its proprietary platform for wealth advisors. 

So far, model portfolios from BlackRock, T. Rowe Price and Clark Capital are being introduced to the platform which was launched a year ago. In a statement, Morningstar Wealth president Daniel Needham noted, “This is an important milestone in the strategic evolution of the U.S. Wealth platform.” 

It’s expected that model portfolios from other asset managers like Fidelity will also be added over the coming weeks. Morningstar sees the addition of more model portfolios as a way to help advisors scale their businesses given the decline in the number of advisors, while the demand for advice continues to increase. 

The company believes that advisors need to outsource portfolio management in order to better serve clients. Additionally, asset managers operating model portfolios have significantly more resources than advisors. 

Surveys show that advisors spend about 18% of their time on managing investments. However, investment performance is not the biggest factor when it comes to client retention. Therefore, integrating model portfolios into their practices can lead to more success for advisors. 

Finsum: Morningstar is introducing model portfolios from asset managers onto its platform. It sees model portfolios as important tools to help advisors grow their practices.

According to Russell Investments, the outlook for active fixed income looks quite attractive in 2023. They see opportunities to outperform benchmarks due to market and trading inefficiencies, index construction, and a volatile macro environment due to the lack of clarity around the Fed’s hiking schedule.

Compared to active equity funds, they see more opportunity for alpha in active fixed income for a variety of reasons. A major one is that fixed income indices are constructed with thousands of securities, often with different durations, coupons, and covenants. For astute managers, this can create opportunities to uncover value especially amid rating changes, new issues, and rebalancing by indexes. 

Another favorable factor is that many participants in the fixed income market are not focused on maximizing returns. Instead, there are forced buyers of fixed income due to capital requirements like insurance companies and banks. Further, central banks remain active in these markets as well, and they telegraph their intentions well in advance. 

Finally, there are simply more inefficiencies in fixed income as the vast bulk continue to be traded over-the-counter which leads to less price transparency and wider bid-ask spreads. 

Finsum: Russell Investments sees opportunity for investors in active fixed income funds due to more inefficiencies, less transparency, and more opportunities to uncover value..

Last year, transitions among financial advisors lost a little ground, according to Investnews.com, reported linkedin.com.

But, tada, independent broker-dealers picked up almost 1,000 advisors in 2023.

The morale of the story? The volume of transitions is secondary; in the world of recruitment, what reigns supreme is lassoing top producers capable of expanding the business.

Up to date technology’s one way snag advisors.

One word to capture technology’s role in drawing fresh talent: “significant,” according to Jim Frawley, CEO and founder of Bellwether.

“Good technology is a game changer and committing to the tech of the future will be very attractive to those being recruited,” said Frawley. “This includes adopting certain aspects of AI and automation and at least being open to investigating other opportunities to free up time and elevate them. Advisors today are looking at tech to make their offering more attractive and substantial. Tech is also becoming their biggest competitor.”

And you might say recruiting pays off.

For example, leveraging its organic recruiting initiatives, during this year’s first quarter, Cetera Financial Group layered on nearly $3 billion in assets under administration, according to thinkadvisor.com.