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Taking On Current Clients’ Children Could Be A Bad Idea For Advisors (Nerd’s Eye View)
As advisors shift to serve the upcoming generations, many are concentrated on wooing the children and heirs of their existing clients. Michael Kitces wrote on his blog, Nerd’s Eye View, why this is a bad approach for most investors. He compares it to running a retirement home that caters to both the young and old, and how doing so does a disservice to both groups.
“Taking a firm focused on retirees and managing their assets, and trying to mix in clients of all ages, just distracts from the focus of the practice! Such a solution is unlikely to appeal to a younger demographic who will still recognise that the firm’s retiree- and asset-management-centric services are not for them, and may even alienate the retiree clients, too,” Kitces said. “In fact, the whole approach highlights and accentuates the fact that a firm chasing the children and grandchildren of its retiree clients really isn’t focused on the needs of its clients at all, but is simply focusing on the client’s pot of money instead — and chasing it to whatever generation or destination it happens to flow!”
Wearable Technology Will Streamline Communication and Information in Financial Services (WealthManagement.com)
Wearable technology, including smartwatches and Google Glass, is slowly making its way into the mainstream. The adoption of this new trend could mean quicker access to information, Lauren Barack said on Wealth Management. Cost and unfamiliarity are holding back wearables from significant integration into daily life, but financial service firms such as Fiserv and Fidelity Labs are starting to experiment with how these will change communication between advisors and clients.
“Where so much of financial services has gone online, with standard features for all, having a higher-end experience delivered to a higher-end client can be beneficial for the customer,” Barack said.
“People want a high-level of hand-holding and personal touch, which is typically how the wealth management industry has sustained itself,” Serge Van Dam from Fiserv told Barack. “You want to make them feel the digital experience is a premium service. So I think the key challenge is how do you get customers to feel like they that have premium in a digital relationship?”
Advisors Need To Be Well-Versed in Real Estate (Wall Street Journal)
For those who are able to advise on real estate, understanding rates of return and making assumptions about tenants, property repairs, taxes and so on will give them an advantage. David Blain, president of Blue Sky Wealth Advisors, wrote in WSJ that holding real estate provides another stream of income and also has tax advantages. Advisors can charge fees based on the complexity of the client’s financial, tax, and investment situation.
“Advisers who want to add real estate to their repertoire need to be able to identify the right client type for such investments. The right client is someone who can put time and effort into their real-estate investment, and who has sufficient capital,” Blain said. “My general rule is that never more than one-third of a client’s investments should be in real estate. Aside from that, get educated. At the end of the day, advisers should be able to take a property and boil it down to a rate of return.”
How To Take Advantage Of The Robo-Adviser Trend (InvestmentNews)
Robo-advisers have been stirring up attention and are considered to be disrupting the traditional wealth management industry. In InvestmentNews, Hardeep Walia from Motif Investing explained why robo-advisers can actually be more helpful, and less of a threat to existing advisors.
“…In the right hands, technology-driven investing can be one of the best innovations to come along for advisers in a long time. It frees up endless time that may be wasted on back-office operations that takes them away from revenue-generating activities such as behaviour coaching, financial planning and the ability to take on and service more clients,” Walia said.
“Technology-driven investing isn’t so much a battle between humans and machines, but about improving the quality and efficiency of the financial planning process. Advisers can thrive in the era of robo-advisers if they can strike the right balance between high-tech and high-touch.”
Silver has risen 12 per cent since lows in June, but Russ Koesterich from BlackRock has three reasons why it’s not quite time to start buying up silver (or gold).
1. While the metal has had a respectable run over the past month, silver is still playing catch-up after losses earlier this year.
2. The recent jump in silver prices is partly a function of the metal’s volatility.
3. Part of the reason that both silver and gold have advanced this year is that interest rates have unexpectedly dropped.
“For investors looking to take a bet, one factor favouring silver is arguably the economy. Fifty per cent of silver demand is tied to industry. If the economy does improve, silver demand should rise faster. That said, both silver and gold are vulnerable to higher real rates, neither looks particularly mispriced, and investors in silver will need to contend with a lot of volatility,” Koesterich said. “While I believe that most investors should always have a small allocation to precious metals, it’s not clear that this is the time for a dramatic increase in the allocation to either metal.”
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