The International Monetary Fund’s economists just released their semi-annual World Economic Outlook, downgrading global growth and world trade projections. This podcast (6:11) argues that advisors managing clients’ money should probably heavily discount economists’ forecasts and market prices alike, and balance portfolios between risk-on and risk-off tendencies on a permanent basis. The IMF outlook cites numerous troubling uncertainties that could shift the direction of markets, but neither the IMF nor Goldman Sachs nor any other organization’s smartest economists know how to time these shifts.
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Ronald Surz has just started GlidePath Wealth Management with the belief that investors need advisors and advisors need better models. In this podcast interview (9:28), Surz suggests that Modern Portfolio Theory, now 65 years old, may itself be in need of retirement. His goal is to create the most prudent target-date fund in the country, one that is capable of helping investors navigate the risk zone around retirement and re-inject growth into the portfolio during their later years.
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Seeking Alpha contributor Victor Haghani takes on the sacred cow of factor investing, noting the investment craze’s five-year underperformance bears watching by money managers. This podcast (5:27) sees value in cutting edge academic finance, but suggests that strategies whose validity have been established over millennia, such as diversification, should take precedence over those of more recent vintage whose findings are more ambiguous.
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As the moon landing was to America, so too is the giant leap of retirement readiness that occurs through the small steps of your clients. This podcast (5:53) argues that small efforts continue to appear small even at intermediate stages, but lead to mathematically demonstrable large-scale accomplishments if we persist in them.
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Fidelity Investments has introduced five new index funds, most of them sporting expense ratios of just 5 basis points. Because advisors no longer serve as gatekeepers to products, and those products are becoming nearly free, there’s no reason for investors to turn to an advisor…but for advice. This podcast (5:26) argues that that means that advisors have never been freer to articulate their value proposition. But, at the same time, one lesson of Fidelity’s indexing campaign best not ignored is that part of an advisors’ appeal will depend on fees that seem reasonable to consumers in an increasingly competitive marketplace.
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An aging society means aging clients, which creates a business concern for advisors. This difficulty actually presents an opportunity for advisors to distinguish their service to this population by acknowledging and counteracting some of the indignities of age that the elderly face. This podcast (5:44) suggests that advisors display a level of service for all of their clients that is rare and distinctive.
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Asset management firms and investment research services, large and small, are increasingly offering model portfolios for advisors. Does outsourcing the portfolio undermine the advisor’s value or does it free advisors to focus on financial planning? This podcast (5:12) argues that advisors should figure out which approach will result in the best possible outcomes for clients, and make absolutely sure that they can transparently explain to the client what they are doing to add value.
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In an article in The Atlantic, law professors Ganesh Sitaraman and Anne Alstott propose an intriguing fix to America’s retirement crisis, which sort of nudges workers into saving more without imposing costs on business or government, hence lowering political resistance.This podcast (5:28) suggests that the two law professors’ idea makes for an excellent start toward solving a retirement problem that is only growing. Once in place, it would be desirable for the government to take steps that would incentivize further saving.
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An organization that mines the investment wisdom of millionaires reveals that they are not immune from the common misunderstandings about investing. At the same time, a separate study of millennials reflects an honest appraisal of that group’s investment hindrances. This podcast (5:27) suggests that more than a specific educational curriculum, investment success takes a desire to succeed, and persistence, a rare quality for which an advisor can be a valuable resource.
 
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Edd and Cynthia Staton writing on Next Avenue tell the story of how moving from Las Vegas to Cuenca, Ecuador has enabled them to live an upscale lifestyle on a Social Security budget of less than $2,000. But for Americans not keen on uprooting themselves, there are countless ways to improve one’s standard of living without leaving the U.S. This podcast (6:38) suggests that an advisor who fails to explore both portfolio growth and expense reduction can’t get a sense of the client’s true preferences. Advisors must also give due consideration to the non-financial aspects of major life changes.
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