Wealth Management
The debate over custodial pricing continues, with many questioning whether bundling all revenue sources into a single fee is fair. Since custodians don’t face significantly higher costs for a $10 million account versus a $100,000 one, a pay-for-services-used model may be more equitable.
Another pressing issue is the slow adoption of automated onboarding, as many custodians still require paper forms and wet signatures despite available digital alternatives. Some speculate that firms hesitate to streamline transfers because it would make it easier for advisors to switch custodians, reducing client stickiness.
Beyond pricing and onboarding, factors like service quality, cost, and additional features—such as dedicated support teams or integrated technology—shape custodian selection.
Finsum: As the industry evolves, understanding these priorities will be key to creating a more efficient and competitive custodial marketplace.
Americans today allocate a larger share of their wealth to the stock market than in previous decades, a shift largely driven by the rise of target date funds (TDFs). These funds, which automatically adjust their asset mix as investors age, have become the default option in many workplace retirement plans since the mid-2000s.
Research from MIT Sloan suggests that the widespread adoption of TDFs has led younger investors to hold more equities than they might have otherwise. The 2006 Pension Protection Act played a key role in this trend by allowing employers to use TDFs as default retirement investments, increasing participation in equity-heavy portfolios.
While the impact of TDFs is strongest in the early years of enrollment, many older investors have also gradually shifted toward similar investment strategies. As TDFs continue gaining popularity, they could contribute to market stability by influencing stock price movements and reducing volatility over time.
Finsum: The default 60/40 portfolio is too passive for many young investors and holding larger equity younger, could accelerate their savings.
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1) Changing broker-dealers involves legal complexities, including contracts, non-compete clauses, and client ownership issues. Consulting an attorney specializing in FINRA and SEC regulations ensures compliance and helps avoid costly mistakes.
2) Losing access to client accounts upon resignation makes preparation critical. A well-structured plan—created at least 90 days in advance—should categorize accounts, assess compatibility with the new firm, and identify opportunities for electronic processing to minimize disruptions.
3) Involving staff early ensures accountability and a smoother transition. Assigning clear roles, setting deadlines, and holding regular check-ins help distribute the workload, preventing last-minute challenges and ensuring a seamless move to the new broker-dealer.
Finsum: Navigating the broker dealer transition can be difficult but these three steps will make the process smooth
Morgan Stanley has revised its U.S. economic outlook, predicting weaker growth and higher inflation due to escalating trade policies. The bank now expects GDP growth of 1.5% in 2025 and 1.2% in 2026, lowering its prior estimates of 1.9% and 1.3%, respectively.
Inflation forecasts have also risen, with headline PCE inflation projected at 2.5% by December, up from 2.3%, while core inflation is seen hitting 2.7% instead of 2.5%. Despite fluctuating trade policies with key partners, tariffs on Chinese imports remain in place, with China vowing retaliation.
These adjustments follow President Trump’s temporary suspension of tariffs on Canada and Mexico, reversing an earlier move to impose duties over concerns about drug trafficking and migration.
Finsum: Restrictive trade and immigration policies could weigh on economic growth, reinforcing their view of "slower growth, firmer inflation."
Separately managed accounts (SMAs) are evolving, with more firms integrating active management into customized portfolios. Unlike traditional SMAs that use passive indexing or third-party overlays, some new strategies incorporate direct active management for greater efficiency.
Actively managed large-cap equity SMAs, for instance, aim to provide market exposure while outperforming benchmarks through selective stock holdings. Transparency is also improving, with firms introducing after-tax reporting to help investors understand the impact of tax-efficient strategies.
Fixed-income SMAs are seeing similar advancements, with more customization options, such as state-specific municipal bond strategies.
Finsum: As the demand for personalized investing grows, SMAs are becoming a key tool for advisors seeking both performance and tax efficiency.