Wealth Management
For Barron’s, Steve Garmhausen conducted a roundup of various financial advisors to get their input on the best strategy for fixed-income. Some of the factors to consider are where the Fed is in terms of rate hikes, is a recession imminent or will the economy continue to defy the skeptics, and will inflation continue to decline or will it plateau at an uncomfortably high level.
Yet, what is certain is that Treasury yields are at their highest level in decades. Further, investors can lock in positive real returns for many years given the jump in yields, coupled with the decline in inflation.
According to Matt Kishlansky of GenTrust, it’s a great time for investors to buy short-dated TIPS given the 3% coupon. This would outperform Treasuries as long as the inflation rate stays above 1.9%. And, he believes that inflation will prove to be much ‘stickier’ than consensus forecasts.
Thomas Salvino, the CEO of Performance Wealth, recommends building a ladder of Treasuries to lock in yields at different durations. Overall, he still believes the best way to build wealth is to build a portfolio of high-quality companies that are regularly increasing dividend payments.
Finsum: Fixed-income is in the spotlight as investors and advisors look to lock in lofty Treasury yields. Barron’s asked some advisors on their best fixed-income strategy.
In an article for SmartAsset, Rebecca Lake CEPF discusses some time management tips for financial advisors. This is especially relevant for advisors in the early stages of their careers as they often have multiple roles such as prospecting for clients, servicing existing clients, portfolio management, operations, marketing, etc.
Many advisors end up overwhelmed and working inefficiently. Ironically, advisors need to audit their time and efforts to ensure that their daily routine is consistent with their long-term goals which is a similar process with onboarding new clients.
The first step is to start creating a structure and routine to your day especially in regards to the most important tasks that drive success. Often, advisors can end up in a reactive mode throughout their day which leaves them tired at the end of the day but still unproductive in terms of achieving longer-term goals.
Another step is to identify tasks that are time-consuming but not productive and find ways to outsource or delegate these. If this is not possible, then you can put some time limit on these tasks.
Overall, these steps can help advisors be more productive and also have a healthier work-life relationship while ensuring that progress is being made towards longer-term goals.
Finsum: A big challenge for advisors is time management. This is even more the case for new advisors who have to build their business while they learn the business.
At Morgan Stanley’s US Financials, Payments, & Commercial Real Estate conference, CEO James Gorman shared some thoughts on the bank’s future, and why he’s particularly bullish on its wealth management arm.
According to Gorman, the bank continues to look for opportunities to expand its asset management business through acquisitions. He believes there is more growth opportunity in this area especially compared to investment banking, lending, or sales & trading due to the industry being ‘non-consolidated’ unlike other parts of the financial world. He is also open to making deals in new geographies.
While Morgan Stanley has traditionally been a Wall Street-based bank, Gorman has sought to increase its presence in wealth management during his 14 year tenure. Some of his most notable acquisitions include Eaton Vance, Calvert Research and Management, and direct indexing provider Parametric Portfolio Associates.
He was particularly positive on direct indexing, since it has resulted in ‘huge positive flows’, and it has seamlessly fit with the rest of its wealth management division. Overall, wealth management is the fastest-growing part of its business albeit the smallest with $1.3 billion in revenue in the first quarter.
Finsum: Morgan Stanley CEO James Gorman has made a successful bet on wealth management as a key growth driver for the bank. He continues to believe in this strategy and is looking for expansion opportunities.
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In an article for AdvisorHub, Karmen Alexander discussed the first 100 days of the new presidents of Merril Lynch, Eric Schimpf and Lindsay Hans. The duo have been hitting the road and personally meeting with the company’s roster of advisors, associates, executives, and investment professionals across major markets.
They are also betting on a new growth strategy which dovetails with its parent company, Bank of America. Essentially, it comes down to discovering new talent and then investing in their training. And, it’s a major shift from its previous aggressive recruiting of brokers and advisors.
Currently, it’s targeting about 200 new advisor recruits every quarter. In part, this is a response to the current attrition rate of 4% annually due to a combination of recruitment by competitors, exits from the industry, and retirements. The new trainees will also help to offload work and responsibilities from existing teams so that they can focus more on growing their business and serving clients.
Merril is also offering incentives for advisors to pursue new clients. So far, it’s working as it saw a more than 100% increase in the number of new client relationships in the first-half of the year and a 150% increase in the number of net new households added.
Finsum: Merril Lynch has two new presidents leading it. In their first 100 days, the duo have unveiled their new growth strategy for advisors and clients.
For Bloomberg, Hideyuki Sano shared some findings from an Invesco survey of sovereign wealth funds and central banks. Invesco surveyed 85 sovereign wealth funds and 57 central banks which manage a cumulative amount of $21 trillion.
The major takeaway is that the group is looking to increase allocations to fixed income and gold due to a combination of higher yields, increased geopolitical risk, and a shaky economic environment. They continue to see inflation as the biggest risk to returns and is one factor in their bullishness on gold.
Interestingly, the sovereign wealth funds and central banks remain cautious on equities despite the strong rally over the last 9 months. In fact, many are looking to tweak their asset allocation models in order to increase exposure to fixed income as they look to take advantage of higher yields.
Within the fixed income market, they were most bullish on emerging markets and high-yield. Compared to last year, there was a sharp rise in those who are bullish on private credit funds due to their strong performance over the past couple of years in a challenging environment.
Finsum: Invesco conducted a survey of 85 sovereign wealth funds and 57 central banks. The major takeaway is increasing bullishness on fixed income and gold due to concerns about inflation and a potential recession.
SEI is adding 3 new strategies to its lineup of model portfolios, using ETFs from Dimensional Fund Advisors. Now, SEI offers 24 model portfolios, encompassing a broad range of categories and styles.
SEI launched its model portfolio offerings in 2022. Currently, the firm manages about $1 trillion in assets which include hedge funds, mutual funds, and separately managed accounts. As of June 2023, the firm had 7,400 independent advisors using its platform.
In a statement, SEI said that the additional offerings would increase flexibility and help investors meet their objectives. It sees upside in combining SEI’s expertise in asset allocation and breadth of advisors with Dimensional’s fund management and research.
Asset managers are increasingly boosting their model portfolio offerings for advisors. Currently, about $5 trillion of assets are managed by model portfolios with expectations that this figure will exceed $10 trillion by the end of the decade.
Model portfolios give advisors and investors access to sophisticated strategies for minimal costs. It also allows advisors to spend less time on portfolio management and more time on servicing clients and growing their business.
Finsum: SEI is adding 3 ETFs from Dimensional Fund Advisors to its model portfolio lineup. In total, SEI now offers 24 model portfolios to its advisors.
Category: Wealth Management;
Keywords: #clients; #advisors; #model portfolios;