Wealth Management Insights

The Family Office investment landscape in 2024 is marked by a decisive shift toward private markets. According to Goldman Sachs, private equity claimed a significant portion of Family Office portfolios in 2023 – representing 26% of their assets. This keen interest in private equity is further substantiated by the UBS Global Family Office Report, which reveals that a remarkable 86% of Family Offices are planning tactical overallocations within this asset class over the next 12 months. In 2023, Family Offices have shown a growing appetite for private debt as a component of their investment portfolios. The BlackRock Global Family Office Survey highlighted that despite a challenging economic outlook, less than a quarter of these offices intend to make material changes to their asset allocation. However, there has been a noted shift in investor sentiment towards private debt. Historically, allocations to private debt have been low, with 87% of Family Offices allocating less than 10%, but two-thirds now indicate their intent to increase their exposure, drawn by the potential returns from dislocated markets. This strategic shift underscores Family Offices' belief in the potential of private equity markets to deliver superior returns, both via investing in private equity firms, but also the direct investment in companies in the mid-market segment. Indeed, Family Offices have been increasingly investing directly in companies – over the past decade, there's been a noted rise in such direct investments due to factors like asset accumulation, talent acquisition, robust networks, and the desire for greater control and decision-making ability. Campden Wealth and FINTRX reports highlight that 76% of Family Offices invest directly in companies, with 83% of Family Offices worldwide considering direct investments. The willingness to take on more risk reflects their confidence in identifying pockets of value within the private equity landscape. As Family Offices pivot toward private equity, they are positioning themselves for long-term growth and the preservation of generational wealth. While private equity takes center stage, Family Offices are also recognizing the value of secondaries investments. The UBS Report highlights a notable trend: nearly half of surveyed Family Offices (45%) plan to over-allocate their portfolios to secondaries. This surge in interest can be attributed to the narrowing valuation gap between public and private markets. As public markets rebounded, secondary markets became increasingly attractive. The ability to transact LP interests in this environment has encouraged higher deal volumes. Secondaries funds raised a staggering $34.66 billion in 2023, surpassing the previous year's total and on track to exceed 2021's record. Some alternatives fund managers, such as Morgan Stanley Alternative Investment Partners and Blackstone, have raised capital for secondaries strategies in 2023. #familyoffice #tiger21 #privateequity

Recently, to celebrate my birthday 🎂, I treated myself and a few friends to a stay at a highly luxurious hotel. Although the cost of this experience far exceeded my usual spending limits, I understood and appreciated the importance of the occasion. On the last day of my stay, I received this heartfelt card from the kind-hearted general manager. While the card was a beautiful gesture to show their gratitude for choosing their hotel, there was a small (but not insignificant) mistake in it: The GM addressed me as "Mrs." ...even though I'm not married 😏 While this may seem like a small mistake, it shed light on a common oversight in the business world, hindering a company's ability to fully understand and cater to their target audience, especially when they focus on the needs and preferences of women. The economic influence of women cannot be overstated. With women now controlling roughly half of the world's wealth and business, it's no surprise that many industries, particularly those in finance and wealth management, strive to cater to this influential demographic. Current data reveals that eventually, 90% of women will manage their household finances independently, and women currently possess 31% of the wealth in the United States. Additionally, the transfer of approximately $30 trillion in wealth from the baby boomer generation to the next emphasizes the significant economic impact of women. However, it is critical for businesses to acknowledge that the concept of family and lifestyle has evolved greatly over the years, encompassing various forms and structures. Today, families can include individuals with or without children, married or unmarried individuals, blended families, and same-sex families. Moreover, many women are now choosing to marry and have children later in life, with an increasing number of mothers also pursuing careers outside the home. To effectively serve women, businesses must move past superficial assumptions of gender alone and gain a deeper understanding of the various segments of women they aim to cater to. When serving women, it is crucial to avoid assumptions, such as assuming that ALL women would prefer to work with a female professional or that an all-male team requires a female presence in a client meeting. Similarly, dispelling the myth that women need extra assistance and education in financial matters or that they need to be spoken to more slowly helps create an atmosphere of trust and equality. Approaching the service of women with genuine care, respect, and a willingness to challenge existing stereotypes and gender biases is essential. If you are a woman looking for a wealth management firm that truly HEARS and understands your specific needs, reach out to me to connect you to someone in my network who can be a good fit. #womenshistorymonth #womeninbusiness

European private equity firms are increasingly extending the duration of asset ownership, signaling challenges in distributing proceeds to investors. Data from Gain.pro reveals that in the previous year, European buyout groups held onto companies for an average span of nearly six years, marking the most extended period since 2010. While the norm for private equity is to maintain asset ownership for three to five years, recent trends show a deviation, with the shortest hold periods recorded in 2012 and 2020, averaging under five years. The research indicates a downward trend in the average revenue growth of companies the longer they remain under private equity control. Specifically, companies held for over seven years exhibited an average growth rate of 6.5% annually, which is significantly lower than the growth rate of those held for under three years. This trend poses a dilemma for private equity firms as they face the challenge of divesting slower-growing companies with slimmer profit margins, a necessary step to redistribute capital to their investors. The conventional buyout approach is experiencing heightened strain, particularly as firms find it difficult to liquidate investments from the era of booming industry and low-interest rates. #privateequity #liquidity #secondary #returnofcapital #privatemarket #institutionalinvestor #privatecredit #privatedebt #growthequity #fiduciary #buyout https://on.ft.com/4bGym3m

In investing, I've found, we often talk most about investing for the "long-term." That's important, clearly. But in wealth management, perhaps not every goal is long-term. In a new article, I write about three strategies to manage short-term goals and time cash flows, strategically using bonds, bond funds, and cash and other short-term investments for money needed soon. How soon? We suggest, ask yourself, or work with planner to determine, "how much money might I need for any goal, within the next 2-4 years," beyond a paycheck, Social Security, investment income, or other sources. Then, consider these strategies: #1 - Asset/liability matching. CD and bond ladders are not just ways to help manage the risk of changing interest rates; they can also be a useful short-term, cash-flow management strategy. Match the amount needed (the “liability”) with an “asset” that has a matching investment time horizon to generate the cash you need, when you need it. #2 - Duration targeting. This strategy involves laddering by time horizon using bond funds. Not every bond fund is the same, so choosing wisely by you particular need, goal, time horizon, and risk is important. #3 – Cash management. Think about managing cash for two purposes: (1) everyday cash in your checking account or brokerage account - what you need today to pay bills and expenses or purchase investments, if you choose; and (2) savings and investment cash - cash “products” like money market funds and bank CDs that may offer a higher yield and help you preserve your principal, while still providing easy access to your money. https://lnkd.in/gfyWUGk9 #investing #wealthmanagement

This video podcast by Ndubuisi Ekekwe on "Winning Your Financial Future" provides a comprehensive roadmap to achieving financial independence, structured around five core pillars. It begins with the critical importance of getting out of debt, emphasizing that debt is a financial burden that prevents individuals from truly building their own wealth. Strategies for debt reduction include aggressively paying down bills, optimizing income to accelerate repayment, and strategically prioritizing either high-interest debts (for maximum long-term savings) or smaller debts (for psychological momentum). The second pillar focuses on establishing an emergency fund, or liquid assets, to provide psychological security and a buffer against unforeseen financial shocks. The recommendation is to have six to twelve months' worth of basic living expenses readily accessible, ideally in a savings account that can also earn some interest. This fund ensures stability and peace of mind, allowing individuals time to recover from job loss or other emergencies without falling back into debt. The third crucial step is strategic investing. The lecture stresses the need to automate investments and adjust investment strategies as financial goals evolve throughout one's life. Three investor profiles are introduced: "growth makers" who seek high returns from high-risk ventures like startups, "income chasers" who prioritize stable dividend payments, and "value pickers" who identify undervalued companies with long-term appreciation potential. The overarching message is the individual's responsibility to align their investment philosophy with their personal circumstances and professional journey. The fourth pillar, improving skills and earning potential, is presented as a fundamental driver of financial freedom. By deepening one's means to earn more—not necessarily by working longer hours, but by increasing value—individuals can generate more capital for investment. This increased earning capacity fuels the investment cycle, building financial resilience and paving the way for a more secure retirement. The speaker debunks the myth that wealth is solely a result of luck, asserting that the richest individuals achieved their status through diligent work and disciplined management of their earnings. Finally, the lecture concludes with the indispensable practice of pruning expenses. This pillar underscores that financial discipline in spending is paramount. Uncontrolled expenses can negate all other efforts towards financial freedom, effectively trapping individuals in a cycle of financial dependence. By consciously managing and reducing unnecessary outgoings, individuals can free up more resources for debt repayment, savings, and investments, thereby solidifying their path to true financial independence https://lnkd.in/eNJvvwdb

A recent report from consulting firm Cerulli cited a 72% failure rate for rookie advisors in the wealth management industry. It’s no wonder then why people are talking about a looming crisis of retiring advisors that will have no one to replace them. This was a hot topic at a recent lunch we held for Women In Wealth - a collective of female North Texas wealth management professionals led by BFS Advisory Group. With the idea that it would be very cool to look back in 5-10 years and say that we had a hand in changing that trajectory, especially for women, we landed on a few key topics that need to be addressed to create permanent positive change and gender balance to our industry: ·  The commission compensation structure is unappealing to young female advisors (maybe older ones and probably males too) who just want to do good work for clients but don’t enjoy sales. ·  Diversity is still lacking in wealth management. We need to make it abundantly obvious when women are younger that this is a superb industry to build successful careers, with different opportunities from operations to investments to advising, and flexibility with remote work. ·  Due to the lack of women advisors in the industry, many female investors are still not totally aware how wealth management can help them achieve their goals and increase financial confidence. · There are solutions on the horizon, including firms that are building teams of people to support clients, creating residency programs, and teaching through mentorship. · The communication in our industry needs to have less jargon for new recruits, and clients. The focus should be on the role that money plays in our lives instead of the intricacies of how a portfolio responds to economic data. Instead of talking about the alpha generated by an investment, we can focus on how the investment can help a client send a child to college. It’s time for the wealth management industry to experience some long overdue change, and BFS Advisory Group intends to be at the tip of the spear with other like-minded firms who see the opportunity to build a more eclectic team to serve a wide range of clients with transparency and clarity. https://lnkd.in/g4XdaPbF

2023 has shown us how hard forecasting is in this pandemic-driven business cycle. Investors started the year expecting a U.S. recession and are now ending it much more optimistic about a soft landing. However, market gains have been fairly concentrated, and the global economy still faces headwinds. We explore what this level of optimism could mean for markets and other themes shaping the landscape in the Russell Investments 2024 Global Market Outlook.   Here, I share some thoughts on asset allocation in the year ahead. We see the current environment as one ripe for active managers; but we believe that choosing the right ones and combing them will require more research and skill. Diversification should include next-gen diversifiers like real assets and private credit to deal with macro factors like inflation, slow growth, and trade. And despite our more cautious outlook for 2024, we still see opportunities in a total-portfolio context. Government bonds are valuable as yields beat inflation, and we favor quality equities for their value and defense. REITs and global listed infrastructure offer attractive value relative to traditional asset classes and stand to benefit from longer demographic and technology trends.   Against this backdrop, we find it critical to look across the broad macro picture and be more active, nimble, and discerning. Read the full outlook for more insights: https://bit.ly/3KA7jMz

“How do I know which financial advisor to work with?” Look for 1 variable: ✅ Communication The best advisors are not the ones who: • Send you hot new “stock tips” • Have impressive certifications • Return an extra 0.01% annually The best advisors prioritize a consistent line of communication with their clients. Communication with your advisor leads to: - Great long-term relationships - Fewer emotional decisions - More clarity on your goals Remember: 📈 Life-changing wealth is made in volatile environments. 📉 And life-changing wealth is destroyed in volatile environments. Your advisor can be a CFA-level investing guru... But if they aren’t there for you when the going gets tough... Human emotion could derail even the most sophisticated strategy. Any advisor can make you a plan. But the best will guide you through it every step of the way. - - What do you look for in a financial advisor?

Nuveen, a TIAA company’s latest equity market outlook: Equity markets take their cue from central banks   Global equities rallied hard in the fourth quarter, with #consumer spending remaining robust thanks to a healthy labor market and rising wages. Also fueling the risk-on period: softer inflation data, which prompted the Federal Reserve to pencil in rate cuts for 2024. But while the Fed was undoubtedly encouraged by moderating prices, it refused to give the “all clear” on the inflation front. Moreover, investors need to assess the cumulative impact of the central bank’s historic rate hikes and their lagged effect on economic #growth, which could map out a hard road for a soft landing.   Against this uncertain backdrop, we’re still focused on identifying compelling equity investments — in particular, high-quality companies with strong fundamentals that are well positioned to withstand an economic downturn, which we expect in late 2024. These opportunities, along with key themes, insights and analysis, are highlighted in our latest global equity market outlook, “Equity markets take their cue from central banks.”   You can read the outlook here: https://lnkd.in/gZmiiwEB   How do you think equity #markets will perform in the first quarter?

Warren Buffett started off his annual letter to Berkshire Hathaway shareholders on Saturday with a tribute to his long-time friend and business partner Charlie Munger, who passed on November 28, 2023. All in all, I think this was one of Buffett’s best annual letters of the past decade. He are 7 investing and life wisdoms from Buffett in the letter that would serve people well to remember: 1. “Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring.” 2. “At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies – and simply sitting tight – can deliver wealth almost beyond measure.” 3. “People are not that easy to read. Sincerity and empathy can easily be faked.” 4. “Berkshire benefits from an unusual constancy and clarity of purpose. While we emphasize treating our employees, communities and suppliers well – who wouldn’t wish to do so? – our allegiance will always be to our country and our shareholders. We never forget that, though your money is comingled with ours, it does not belong to us.” 5. “Though the stock market is massively larger than it was in our early years, today’s active participants are neither more emotionally stable nor better taught than when I was in school. For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.” 6. “One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital.” 7. “We did not predict the time of an economic paralysis but we were always prepared for one.”