Wealth Management
As the end of the year approaches, investors should focus on capital gains management and explore tax-smart strategies in nonqualified accounts. Active trading can significantly impact capital gains liability and improve after-tax performance.
Moving investments into exchange-traded funds (ETFs) may offer a tax-efficient solution, with active ETFs presenting a strong option during tax loss harvesting. ETFs have been more tax-efficient than mutual funds due to their unique structure, minimizing capital gains distributions.
Additionally, actively managed ETFs typically have lower operational costs than mutual funds, providing a more cost-effective investment option. This makes them appealing to investors looking for both performance and tax efficiency as they assess their portfolios.
Finsum: It will be critical with some potential rallies coming on for investors to maximize their tax efficiency and take advantage of the volatility in sectors of the market.
The ongoing unwinding of yen carry trades could lead to more turbulence in the markets this month, warns Kathy Lien of BK Asset Management. As U.S. yields drop and the dollar weakens, the yen is expected to gain strength, potentially triggering sell-offs similar to those seen in August.
The practice of carry trading, where investors borrow in low-yielding currencies like the yen to invest in higher-return assets, is facing disruption due to Japan’s recent interest rate increases. Lien suggests that if stock markets experience significant downturns, the yen's value could continue to rise, reversing its longstanding undervaluation.
This shift may impact asset prices globally in the coming years, with additional volatility likely as the U.S. economy faces growing pressures. September, often volatile for stocks, could see more dramatic market moves.
Finsum: This is one of the most important currency stories to watch in the coming weeks as rate cuts look to be very aggressive.
RNMKRS, a company based in Larchmont, New York, leverages artificial intelligence (AI) to enhance sales training. By creating an AI persona called Alex, the system simulates customer interactions and provides feedback to sales representatives, helping them improve their communication and selling skills.
Since its inception, RNMKRS has trained around 30,000 sales professionals from over 100 companies. Co-founded by Stefanie Boyer, a marketing professor at Bryant University, the platform is grounded in her extensive research on learning science and sales performance.
The AI-driven system has role-played over 500,000 conversations, refining its ability to give consistent, data-backed feedback. Boyer believes AI has the potential to transform human-to-human communication by offering non-judgmental, constructive criticism.
Finsum: Advisors really need to utilize the full capabilities of artificial intelligence to grow and expand their business, and sales training could be a very valuable addition.
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Gold prices retreated slightly after hitting a record high in response to the Federal Reserve's half-point interest rate cut. Spot gold fell 0.4% to $2,560.29 per ounce after briefly reaching $2,592.39 earlier in the day, while U.S. gold futures closed up 0.2%.
The Fed's decision to lower rates, which is expected to continue into next year, has pushed gold prices higher due to its reduced opportunity cost compared to interest-bearing assets. As bond yields rise and the dollar weakens, the demand for gold strengthens. Investors are awaiting further insights from Fed Chair Jerome Powell on the future direction of monetary policy.
Meanwhile, with inflation still elevated, many are turning to gold as a hedge against eroding purchasing power. Silver prices rose 0.6%, while platinum remained steady, and palladium dropped 3.2%.
Finsum: Gold could be an important hedge if inflation comes back from the grave with interest rates quickly falling.
With 2024 coming to an end, financial advisors contemplating a switch to a new broker-dealer may wonder if there’s still time to make the move. While possible, the process can take several months depending on the complexity of the transition and level of support available.
Advisors looking to act quickly may benefit from financial incentives and smoother tax records by completing the transition before the new year. However, rushing such an important decision isn’t advisable, so careful planning and blocking time for key discussions is essential.
Transition consultants can help expedite the process by securing offers and guiding advisors through the logistics. Ultimately, those who begin the process now may still be able to switch broker-dealers by the end of 2024, but many may find it more practical to plan for early 2025.
Finsum: While it’s certainly late in the year these services could help optimize time in order for a smooth transition.
An unprecedented number of American households are uncertain about the economic future, with many expecting inflation to take a larger portion of their income. Financial stress from the high cost of living and rising borrowing costs has added to the uncertainty, especially in an election year.
Though consumer sentiment slightly improved in September due to expectations of lower inflation and potential interest rate cuts, the overall view of current conditions remains near record lows. Prices are still significantly higher than before the pandemic, despite inflation slowing.
A growing number of Americans expect no real income growth over the next five years. Additionally, confidence in achieving a comfortable retirement is at its lowest point since 2013.
Finsum: Inflation hasn’t been a strong concern for retirement in nearly 40 years, but suddenly it is having a critical impact, and investors should consider options accordingly.