Displaying items by tag: advisors

Algo Chain, a fintech wealth management startup, is launching an AI powered toolkit subscription service which utilizes ChatGPT 3.5 Turbo. The service offers a variety of ETF model portfolios that use technical signals and macro data points to help users navigate markets and optimize asset allocation. 

The AI is designed to generate signals and suggest allocations based on historical precedent. It enables advisors to sort through thousands of ETFs to find the ideal combination of factors to suit a client’s needs. 

Given the proliferation of AI tools following the release of ChatGPT 3.0 earlier this year, it’s not surprising to see the technology applied to wealth management. The company believes that the bulk of a portfolio’s returns are due to asset allocation. Thus, it offers insight into how various asset allocations have performed in various circumstances. 

This is Algo Chain’s second model portfolio offering. Earlier this year, it launched six model portfolios in tandem with HANetf, representing various themes. It’s expected that we will continue to see a proliferation of AI-backed tools to enhance model portfolio offerings over the coming months.

Finsum: Algo Chain is launching an AI powered toolkit to help enhance and optimize ETF model portfolios offerings.

In an article for InvestmentNews, Jeff Benjamin discussed the need for succession planning especially as there are about 100,000 advisors that are expected to retire over the next decade. In total, they are estimated to control $10 trillion in assets. 

Of this group, 45% intend to transfer ownership to employees or a family member. Around 30% are looking for an external transition, while 25% do not have a firm succession plan. According to industry insiders, this is a major challenge for the industry especially as succession plans take time to prepare. Additionally, there needs to be guidelines for alternative scenarios especially as fewer young people are entering the industry.

Even in the event of a sale, there are complications and contingencies that need to be considered such as your clients’ comfort and the financing of such a transaction. With internal transitions, unexpected events can also arise such as relationships souring with prospective owners that result in a shift of strategy or advisors being recruited away to other firms. 

Finsum: Financial advisors need to have a succession plan. This is especially critical given the wave of retirements that is expected to hit over the next decade. 

In an article for InvestmentNews, Bruce Kelley discussed some of the collateral effects of First Republic’s troubles. Since these issues began in early March, around a third of the company’s advisors in its wealth management division have left the firm.

Following JPMorgan’s takeover of the bank, filing show that 150 advisors remain at the firm, while there were around 230 at the beginning of the year with about $271 billion in total assets. According to JPMorgan, many of the 150 advisors intend to stay on and transition to JPMorgan’s wealth management division. 

The bank also revealed that it plans to honor any recruiting deals that were struck by First Republic. Notably, First Republic had been quite aggressive in recruiting clients from banks and smaller firms. Ironically, it had recruited about 40 advisors from JPMorgan since 2010. 

JPMorgan’s acquisition should stem the tide of advisors leaving First Republic. In April, a team of First Republic advisors, managing $10.8 billion in assets, departed for Morgan Stanley. Prior to this, another team, which managed $2.3 billion in assets,  was picked off by Rockefeller Global Family Office.

Finsum: One of the consequences of the failure of First Republic bank is that many advisors are leaving for greener pastures. But, the JPMorgan acquisition may put a stop to this.

In an article for IFAMagazine, Meg Brantley discusses how active fixed income ETFs staged a turnaround in early March. The asset class was moving lower as it seemed that the economy would continue growing at a rapid clip, adding further fuel to inflation.  However, there was a negative shock to the economy as Silicon Valley Bank and Credit Suisse had to be rescued. In turn, risks to the financial system climbed, and there was a stunning turnaround for fixed income. The 2-year Treasury note dropped 119 basis points in three days which was the largest drop since 1987. 

For financial markets, it was a major sea-change, and it seems to have marked the bottom in bonds which have been steadily trending higher. Odds of a recession and rate cuts in the first half of 2024 also climbed higher which further contributed to strength in fixed income. 

These events have contributed to volatility but also led to opportunity for active fixed-income managers. The forces of a hawkish Fed and raging inflation which dominated 2022 created a negative backdrop for fixed income. Now, the macro backdrop for fixed income has gotten more constructive especially with inflation and rates trending in the right direction. 

Finsum: In March, the landscape for active fixed income shifted dramatically. Looking forward, the asset class is offering some compelling opportunities. 

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.