The years-long parade of freedom-seeking advisors out of the wirehouses continues unabated. Meanwhile, consolidation of RIA firms, driven by private equity’s hot money, has similar momentum. Are these trends on a collision course?
Yes, differentiation is hard, which is why developing a niche target market has become so popular recently. It can dramatically reduce the number of competitors. But even advisors who focus on a niche have competition.
I offer a collection of observations and beliefs based on my 48 years of experience in the financial services business, which includes stints as either president or CEO of five different TAMPs and a consulting firm.
Is there a lesson here for financial advisors? Indeed, there are two.
Be a financial physician with a reassuring presence who can reduce anxiety, bring clarity, and induce confidence.
Everyone who has ever invested in Mr. Market at any time in recorded history, except for those who started investing at the end of 2021 or the first few quarters of 2022, made money.
The punditry knows that clients dread uncertainty. They count on it. They prey on it.
The process by which advisors select a TAMP is the latest illustration of fiduciary failure, and the SEC has responded with ominous rulemaking that will have questionable value to our profession.
Now I know why people ignore my warnings about those who claim they can predict the markets.
In the face of bad news, what, if anything, should you do to adjust your long-term portfolio management strategy?
The surging popularity of direct indexing has led to confusion. Some believe it is barely indistinguishable from indexed investing, while others claim it is active management “in drag.”
You have to feel sorry for active managers.
The academic evidence shows that selecting investments, such as mutual funds or stocks, based on past performance is a terrible idea. Use our premium membership service to forward this article to clients with your logo.
This article, which is written for clients, explains that direct indexing portfolios are broadly diversified with individual stocks that are personalized to meet the needs, values, and preferences of an investor.
This article can be forwarded to clients to help them understand inflation, its causes, and how various investment strategies protect against it.
They might ease our fears or satisfy an inner need, but predictions about the markets or the economy are useless to our clients.
Soon – within the next two years – the SEC will wake up and start holding financial advisors who use TAMPs to the same fiduciary standards they hold them to in selecting mutual funds, ETFs, and other investment products. When it does, many advisors will be in trouble.
I am neither for nor against cryptocurrency. If someone wants to use their hard-earned fiat currency to buy bitcoin or ether, go for it. But when you buy cryptocurrency, you own nothing.
For almost three decades the acronym TAMP, for turnkey asset management program, has stuck. It’s time to kill it.
Unless an investor has compelling reasons to maintain their concentrated position, they should liquidate that position and reinvest in a broadly diversified portfolio.
There are many ways to go wrong in choosing a TAMP. Here are two no one is talking about.
We would like to think that investing is a science, but, alas, it is not. Water freezes at 32 degrees. Light travels at 186,000 miles per second. We look for similar rules in investing. There are none.
Legendary investor, Benjamin Graham, explained the stock market in the following way: “In the short run, the market is a voting machine, but in the long run, it’s a weighing machine.” Since the emergence of COVID-19, the weighing machine is broken.
You can build the best portfolio for your clients, but if they don’t stay invested, their chances of reaching their goals will be diminished.
The problem isn’t that market timing never works. The problem is that it works just enough to give you hope, but not enough to improve performance over the long-term.
I’ve worked at firms that offer outsourced portfolio management services – so-called turn-key-asset-management providers (TAMPs) – for almost 30 years. I know the industry very well and have seen my share of disasters. Here’s what to watch out for when selecting a TAMP.
Ever since the growth of robo advisors began to accelerate nearly a decade ago, the dominant trend facing advisors has been the commoditization of investment advice. With the proliferation of high-quality, low-cost investment solutions, advisors have increasingly outsourced their investing, freeing up valuable resources to help clients in other ways. But that doesn’t mean that all outsourced solutions are created equal or that advisors cannot add value through the investment choices that are made on behalf of their clients. Here’s what advisors need to know when choosing an outsourcing solution.
The services that advisors provide may not change much in the coming years, but you have lots of choices to make about which services to deliver and how to deliver them. Your choices will significantly impact your future success.
What keeps your wheels spinning, generating new ideas and creating new solutions? What drives you forward? What is your “why?”
As we age, our physical and mental skills slowly diminish. But there is one vital skill that will improve if you take the necessary steps: writing persuasively.
In a world where everything that can be automated is automated, you need to develop additional services that are highly dependent on personal interaction with your clients. You also need to create a more personalized experience for your clients and establish an emotional connection with them. Here are five ideas to build your humanness.
Keeping portfolio construction simple improves performance no matter what type of investment process you use. Our industry is in love with complexity, but complexity is costly to clients.
