Wealth Management
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.
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Direct indexing has emerged as a popular strategy for investors looking to enhance tax efficiency by owning individual stocks rather than traditional ETFs or mutual funds. Its growing adoption is driven by the rise of passive investing and advancements in fractional share technology, making it more accessible to a broader range of investors.
By selectively selling underperforming stocks and replacing them with others in the index, investors can realize capital losses to offset future gains—a key advantage of this approach.
However, tax benefits are generally front-loaded, meaning that over time, opportunities for tax-loss harvesting diminish as portfolio gains accumulate. To sustain tax efficiency, investors can reinvest funds, donate appreciated stocks, or explore strategies like transitioning holdings into ETFs through in-kind transfers.
Finsum: As direct indexing expands beyond passive strategies, advisors are also exploring actively managed SMAs with built-in tax management features, offering more tailored solutions.
The financial industry is evolving rapidly, with new technologies helping advisors streamline operations and enhance client relationships. Investing in the right tools can give firms a competitive edge while also improving talent retention, as many advisors seek better technology.
Essential tools include CRM software, which centralizes client interactions, financial planning software for scenario modeling, and risk analysis tools to assess investment strategies. Fi360 offers data and technology specific to advisors that can improve their efficiency.
Additionally, scheduling software simplifies appointment management by automating bookings and reminders. Selecting the best options—such as Salesforce for CRM, Fi360 for financial planning, or Calendly for scheduling—can optimize efficiency.
Finsum: With Fi360 advisors have the right technology and can focus more on delivering personalized financial strategies and strengthening client trust.
Managed accounts are set for a major transformation as current models often benefit providers more than participants due to high fees. Employers must evaluate how providers personalize portfolios and whether participants actively engage with these features.
While managed accounts generally offer strong investment management, fee structures can erode some of their value, requiring significant equity exposure increases to match target date fund returns. Personalized portfolio returns tend to fall within a narrow 5% to 7% range, with minor impacts from strategic asset allocation shifts.
A subscription-based model could better align incentives, offering lower-cost options for less engaged participants while providing premium services for those seeking greater customization. Inconsistencies in provider methodologies, driven by factors like risk tolerance and retirement readiness, highlight the need for greater transparency.
Finsum: This is an interesting strategy, but if done properly managed accounts are a great vehicle for retirement and defined contribution.