Wealth Management
First Trust Direct Indexing L.P. increased its stake in Microsoft Co. by 4.2% during the third quarter, per its latest SEC filing. The firm acquired an additional 8,827 shares, bringing its total holdings to 216,816 shares valued at $93.3 million, making Microsoft its third-largest position at 5% of its portfolio.
Other institutional investors, including British Columbia Investment Management Corp and Evernest Financial Advisors LLC, also boosted their stakes, reflecting broad confidence in the software giant.
Over the past quarter, Microsoft insiders sold 41,200 shares worth $17.38 million, with the largest transaction by EVP Christopher David Young reducing his position by 6.51%. Microsoft's share price recently traded at $424.83, slightly down, with strong metrics like a $3.16 trillion market cap and a 35.05 PE ratio.
Finsum: Watching the underlying holdings of direct indexing is key to understanding these strategies in the long term.
Model portfolios serve as pre-designed recipes for building portfolios, offering advisors a time-saving way to manage investments while focusing on financial planning and client relationships. They are often composed of mutual funds and ETFs, with a growing preference for active ETFs due to their cost-efficiency and flexibility.
Popular providers include BlackRock, Vanguard, and American Funds, offering core allocations like 60/40, income-focused, and all-equity models. These portfolios appeal to advisors for their scalability and customization options, such as incorporating funds from multiple asset managers to diversify perspectives.
While they are typically low-cost and tax-optimized, a drawback is their relative lack of transparency compared to mutual funds or ETFs. Investors should ask their advisors about the track record, due diligence, and success metrics of any model portfolio being recommended.
Finsum: We love the use of model portfolios to create customized and thematic strategies for tailored solutions to clients problems.
Separately managed accounts (SMAs) are gaining traction among investors, offering personalized portfolios with features like tax optimization and tailored investment preferences. Once reserved for the wealthy, advancements in technology have made SMAs more accessible, with minimum investments as low as $5,000 through platforms like Fidelity.
While SMAs allow for benefits such as tax-loss harvesting and charitable stock donations, they often come with higher fees compared to ETFs, which can make them less cost-effective for many retail investors.
Critics argue that customization can lead to active management pitfalls, with most SMAs historically underperforming benchmarks after accounting for fees.
Finsum: Innovations in AI and portfolio management tools are enabling financial advisors to efficiently manage larger numbers of accounts with greater precision.
More...
As competition intensifies in wealth management, independent firms are leveraging bold strategies like generous payouts, cutting-edge tools, and strategic guidance to attract top advisors. For advisors considering a change, it’s vital to look beyond incentives and seek a firm that prioritizes trust, accountability, and open communication.
A commitment to radical transparency—a philosophy emphasizing full disclosure and honest dialogue—can set a firm apart in a crowded market. This approach fosters deeper trust by encouraging clear communication, owning missteps, and making decision-making processes visible to all stakeholders.
Advisors who embrace transparency in their client relationships can build stronger partnerships, ensuring alignment of goals and expectations. Firms that champion these values by prioritizing advisor feedback and meaningful investments in their growth will cultivate long-term success for both their teams and their clients.
Finsum: There seems to be a clear leveling up in terms of what firms are offering clients, but don’t sell short the benefits of technology and efficiency when serving advisors.
The latest T. Rowe Price study reveals a notable shift in how employers and advisors approach retirement income within workplace plans. More plan sponsors now hold defined views on retirement income compared to previous years, reflecting increased engagement on the topic.
Managed accounts with income planning features and target-date investments offering managed payouts or embedded annuities are gaining interest as viable solutions. Collective investment trusts (CITs) have also surpassed mutual funds as preferred target-date vehicles due to their cost-effectiveness and flexibility.
Additionally, the study highlights growing employer interest in financial wellness programs, including emergency savings accounts, as tools to enhance employee satisfaction and retention. While ESG integration garners moderate support, the study identifies regulatory and implementation challenges as barriers to broader adoption.
Finsum: Research shows how important advisors are to clients in setting up DC strategies, and they can leverage their influence to shift perspectives.
Municipal bonds have been essential to funding U.S. infrastructure projects, benefiting public facilities like hospitals, schools, and transportation systems through their tax-exempt status since 1913.
With the upcoming expiration of the Tax Cuts and Jobs Act in 2025, the future of this tax exemption faces uncertainty as policymakers explore ways to manage budget deficits. Removing the exemption could significantly raise borrowing costs, hinder infrastructure investments, and place added financial strain on taxpayers.
While alternatives like public-private partnerships and Build America Bonds exist, they present notable complexities and drawbacks. The preservation of tax exemptions for municipal bonds is critical to fostering local autonomy, stimulating economic growth, and maintaining cost-effective infrastructure funding.
Finsum: Removing this protecting this framework could reduce sustainable development and support for communities across the nation.