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Fidelity Continues To Expand And Diversify Its Asset Management Capabilities With Launch Of New Bond Model Portfolios

MARCH 2, 2020

Key Trends from the Latest 2020 FinTech and Investment Conferences

A recap by Scott Silverman, SVP and Head of Distribution at GeoWealth.

GeoWealth was recently on the ground for several of the best conferences in our industry: Inside ETFs in Hollywood, FL., T3 2020 in San Diego, CA., and TD Ameritrade National LINC 2020 in Orlando, FL. These conferences gave us the opportunity to sit in on informative panels and hear about some of the biggest trends.

In case you weren’t able to attend any of these events, don’t worry, we’ve got you covered. Here’s some of the most captivating topics that caught our attention during this winter conference season.

Non-Transparent ETFs – We’ve seen a wave of actively managed, non-transparent ETFs come into the marketplace, and the implications of this new paradigm were top-of-mind among conference attendees. Since the SEC approved the first actively-managed ETF last year, there’s been a lot of discussion about whether asset managers would seek to convert their actively-managed mutual funds into this new non-transparent style. Some attendees at Inside ETFs even predicted “the end of the mutual fund” – we wouldn’t go that far.

The broad consensus seems to be that it’s not an “either/or scenario” and there will be a place for both mutual funds and actively managed, non-transparent ETFs. Most investors, and thus advisors, will continue to use active and passive strategies in tandem due to the diversification benefits.

Custom Indexing – We also heard plenty of discussion about direct custom indexing. Though custom indexing is still in its nascent stages and widespread adoption hasn’t yet taken hold due to the complexity and/or cost of implementation, it remains very appealing to investors interested in building their own index and freeing themselves from the one-size-fits-all wrappers offered so ubiquitously.

Some investors, particularly high-net-worth clients, are starting to press their advisors for greater customization. They don’t want the off-the-shelf products that a typical retail investor might be satisfied with. Custom indexing tailors an investment vehicle to a client’s personal needs and tastes, with an eye towards tax considerations, any outsized holdings, or even inclusions (or exclusions) on particular companies or industries, similar to environmental, social and governance (ESG) programs.

Luckily for advisors, new and economical tech solutions now exist that allow them to deliver this customized approach to index funds, without having to do onerous research or operational work. These advancements in efficiency and cost-effectiveness will become even more imperative as interest in custom indexing continues to grow in various markets.

Environmental, Social and Governance Investing – The rise of ESG investing has been interesting to track these last few years, as more investors look to invest in ways that support sustainability issues and social causes locally and globally.

While the conversation about ESG investing principles has grown, the concept is still in relatively early stages. Investors may want to be socially conscious, but not at the expense of ROI or Alpha. That leaves room for innovative asset managers to develop new technologies and investment philosophies that meet performance goals but still accommodate company and industry inclusions and exclusions as needed, without untenable back office and operational burden.

All three conferences featured compelling discussions about the future of ESG investing and how it can fit into clients’ broader portfolios. Advisors would be wise to keep an eye on this trend and stay at the forefront as it continues to gain foothold among retail and institutional investors.

Fees – All three conferences we attended also addressed the topic of fee compression and consensus is that fees have been cut down as far as they can in most regards. As fees become increasingly bare-bones, it is more essential than ever for RIAs to justify the fees they charge through value-add services.

RIAs can demonstrate their value to clients by serving as “trusted advisors” that provide customized advice and guide them through all the twists and turns throughout their financial journey – a marriage, a new grandchild, a health event. As one panelist at Inside ETFs put it, if firms are offering value beyond just simply recommending ETFs and mailing monthly performance reports, then the fees are justified – “There is no such thing as a free lunch. If something has value, it shouldn’t be free.”

Risk – We’ve been living in an extended bull market for several years now, and it is showing no sign of slowing down – though we’ll see corrections here and there. But, as we know, the good times never last forever.

As such, it is more essential than ever to engage clients in educational discussions about possible risks and adjusting their portfolio according to their risk tolerances. At T3 2020, there was a lot of talk about the importance of probing client risk tolerances, and helping them understand how and when to react within their portfolios. Helping clients understand all different types of risks and how to view these things without emotion is a key way an advisor can show their worth to clients and help retain those clients through all market cycles.

All in all, it was a whirlwind conference season attending these impressive events, and the insight and connections made it well worth it. If you’d like to get in touch to discuss any of these topics further, click here.

“In case you weren’t able to attend any of these events, don’t worry, we’ve got you covered. Here’s some of the most captivating topics that caught our attention during this winter conference season.”

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