Robo Advisors

The common characterization of US-China relations as a new Cold War is wrong. Instead, the most recent spike in tensions between the two countries – the second time this has happened since US President Donald Trump took office in 2016 – is primarily motivated by political considerations ahead of the November US presidential election.

Read Harold Evensky's latest NewsLetter.

Recently, Advisor Perspectives published two articles based on the data found in The Robo Report regarding the performance of robo advisors compared to our normalized benchmark. We feel it is important to introduce our perspective on the data in our report and respond to the conclusions drawn in those articles.

He explains why even someone like himself — who has spent a lot of time around hyper-rational people who respected him, knew where he went to school and how much money he made — shares the feeling of being demoralized.

The selloff this week was “perfectly normal,” according to the math. Find out why it makes sense to have a long-term investment horizon.

It will go down as the wildest of the shale wildcatters, the overreaching pioneer of fracking techniques that minted vast fortunes and, now, have left behind ruin.

From a performance perspective, I give robos an “A” for being average, and hope that future research can make more meaningful statements as to how robos truly impact investor outcomes.

Fatal police encounters fueling protests nationwide have prompted executives from almost every major bank and investment firm to speak out. And behind the scenes, it’s driving conversations in an industry that wants to be viewed as more socially responsible, even as it struggles to deliver on promises to improve diversity within its ranks.

Robo-advisors faced their first big challenge with the bear market in the first quarter of 2020. They lost, and that is an ominous sign for the future of automated advice.

The company is taking on the country’s large banks with services that will include a discount brokerage and robo adviser.

I examine new research that offers a way to algorithmically determine how to draw down one’s savings.

The economic calendar is packed with important reports. In normal times we would all be very interested, but the times are far from normal. Several of the reports emphasize April data, the first full impacts of the pandemic and shutdowns.

What is the value of a financial advisor in 2020? We believe financial advisors have never been more valuable than they are right now. This annual Value of an Advisor study quantifies that dedication and the resulting benefit.

The economic calendar includes several important releases, but few reflect the COVID19 effects. Everyone knows the economic news is dismal. Just how dismal does not seem to matter.

Vanguard Group and Ant Financial’s joint venture is rolling out a new robo advisor to target the Chinese fintech giant’s 900 million users.

It was big news last fall when Joe Namath was on the airwaves promoting his “excellent, free” Medicare plan. Here’s what to tell your clients when they ask about it.

Since the market downturn began, TD Ameritrade has seen new-account openings for its automated investing platform jump 150%.

The coronavirus will accelerate the changes to the wealth management industry predicted by McKinsey & Co.

Quarterly commentary giving an overview of the markets and the importance of having and implementing a strategy when investing in the markets.

In a world at war with the coronavirus, your worst enemy is the game your mind plays with itself.

Growing policy responses reflect greater estimates of the costs of COVID-19.

Growing policy responses reflect greater estimates of the costs of COVID-19.

Unfortunately, the premise underlying your advice may be flawed. You might be doing your clients (and yourself) a terrible disservice.

Advisors can better serve their clients on one of the most important investments they will ever make – their family’s education.

We have a full economic calendar. Only the FOMC decision will get major market attention. Initial jobless claims provide a post-virus look at the job market. Housing data remains interesting. Despite this, the media focus will remain on the coronavirus crisis.

Many questions – and few answers – surround the coronavirus epidemic and its implications for financial markets. Read Howard Marks’s latest memo, in which he shares his own questions, guesses, observations and inferences to help make sense of the potential impact of the virus on global economies and markets.

With the markets shell shocked by of the worst weeks on record, analysts are split on whether investors are simply overreacting to the coronavirus epidemic or if we are confronting an actual existential threat to the global economy.

I’m teaching my kids how to read books. But it’s just as important for them to know how to read people. The truth is communicated loud and clear through nonverbal cues; most of the time we aren’t listening.

On how the investment industry commercialized “socially responsible investing,”
On how financial marketers built a mythology around the analytical tool ‘ESG,’
On how the United Nations abetted the sale of private profit as public good,
And why these triumphs of free enterprise obstruct progress on climate change.

For many investors, the beginning of the year is a time for them to review their investing strategies and reassess their risk tolerance. Though the U.S. stock markets have been on an incredible run last year, recent polls of economists and American voters indicate great concern about a looming recession.

As you will see today, sometimes I get it really, badly, completely wrong. Thankfully, not too often.

Trump's decision to take out the Islamic Republic's most celebrated military leader, Qassem Soleimani, was a timely reminder that we face many problems. An armed conflict between the US and Iran is clearly one of them but far from the only one. Here is a list of the ones we worry mostly about, going into 2020.

Bob was in Mumbai last week to speak at the iFast conference to a group of approximately 150 independent advisors based in India. His talk covered the state of the digital-advice (“robo”) industry, based in part on research that has appeared in Advisor Perspectives.

A brainstorming session hosted by the CFP Board on December 13 offered a look at how the planning profession will evolve over the next 10 years. Here’s a view of the landscape in 2030 and what it will take to get there.

Did you know that more than $12 trillion in assets under management are engaged in one or more strategies of sustainable investment in the United States? This comprises more than 25 percent of the professional managed assets across the country and is a 38 percent growth from 2016 figures.

We don’t have much time to get our house in order, either in the US or globally. Everything I’ve said today applies, to various degrees, throughout the developed world. Thinking that 2% inflation or zero interest rates coupled with massive deficits will somehow help is beyond wishful thinking.

What can advisors do to be more transparent or communicate better?

Nearly every aspect of the advisory industry is undergoing some form of transformation today—spelling an opportunity for those advisors who are committed to continuously evolving their approach.

Should you be comfortable referring your clients to CPAs or other professionals who also handle annuities, investments and insurance?

RIA investment platforms – specifically the vehicles and tools they use to manage client portfolios – are about to undergo the most profound change in a generation. With the race to zero for trading stocks, mutual funds are becoming outdated. Customized portfolios of individual stocks will be the winner.

When the US and ultimately the rest of the Western world began to engage China, resulting in China finally being allowed into the World Trade Organization in the early 2000s, no one really expected the outcomes we see today. There is no simple disengagement path, given the scope of economic and legal entanglements. This isn’t a “trade” we can simply walk away from. But it is also one that, if allowed to continue in its current form, could lead to a loss of personal freedom for Western civilization. It really is that much of an existential question.

The evidence is overwhelming that automation has positively impacted total factor productivity (TFP) for years, i.e. GDP growth continues to benefit from the digital revolution despite the fact GDP growth is rather pedestrian these years.

The conventional wisdom around digital advice platforms – what are commonly referred to as “robo advisors” – is that they will commoditize the investment process, and push traditional, human advisors to justify the value they add – and, hence, justify their fees – with services other than investment management. So far, however, the performance results of those platforms have been unimpressive. What do those results bode for the future of digital advice?

In investing, tribalism is outright dangerous to your wealth. When you allow tribalism to impact your thinking, you lose the ability to think independently.

Neither my company nor I are long or short Tesla shares. Why don’t we own it?

Chris Davis is chairman of Davis Advisors, a firm founded by his father that has followed the same value-investing discipline for its 50-year history. In this interview, Chris discusses the exceptional opportunities he is finding among the financial stocks, how financial advisors can add the greatest value and the biggest changes he has seen over his career.

Early last week, the Chairman announced a new, as yet unnamed, Fed program through which the bank will now buy regular amounts of short-term U.S. government debt. Seeking to counter the rumblings that a new form of quantitative easing would be seen as an admission that the economy may be in trouble...

Several rumblings in the quarter raised concerns about an imminent market crash. Another distinctive possibility is that the bubble of "airy promises" and overly optimistic growth expectations is bursting.

Lon Erickson, CFA, is a portfolio manager and managing director for Thornburg Investment Management and oversees five of its fixed income mutual funds. Erickson says that rates could be as low as 1.1% in the next year, and he explains why a collaborative, bottom-up construction process will benefit advisors and their clients.

The press has been reporting on a trade spat between Japan and South Korea, ostensibly tied to South Korean anger over Japan’s behavior in the runup to World War II. The dispute is only the latest chapter in a long history of conflict between Korea and Japan.

When Carl Gugasian of Dewey, Cheatham & Howe rates Bianchi Corp. a “Strong Buy,” whose interest is that in? We dig into the conflict between WallStreet and You.

If the robos were pitted against a fifth grader, consisting of a 60/40 cap-weighted index portfolio, Jeff Foxworthy would easily give the victory to the 10-year old.

With interest rates on the 10-year US treasury bond having moved nearly 50bps higher over the last 10 days it is certainly worth asking the question if we’ve seen the low in interest rates or whether this is more of a correction in an ongoing downtrend in rates.

What fueled the rise in U.S. employment, and can we sustain it?

Rick Rieder highlights the economic policy state-of-play today, and where it may lead to should economic growth falter, productivity not materialize, and populism continue to thrive.

The fact that the equity markets are rallying in the face of this week’s negative “energy blast” is highly bullish.

For years, economists have disagreed whether ageing is inflationary or dis-inflationary. Ever since IMF published a controversial paper in 2015, the debate has raged, but I have finally concluded that ageing is most definitely dis-inflationary (and perhaps even outright deflationary), and here is why.

I work in the professional referral business. I spend a lot of time talking to advisors and investors who are seeking financial advice.

Economic uncertainty has spiked given the escalating U.S.-China trade war; with increasing risk it weakens the dividing line between the manufacturing and consumer sectors.

The saddest part is that the world trading system does, indeed, have serious problems, many of which emanate from China. We need to fix them. I fully support that goal. I am glad we have an administration that takes Chinese behavior seriously. But the tariff strategy is making the situation worse, not better, and the focus on trade deficits is entirely misplaced.

Every summer for the past several decades I have organized a series of Friday lunches in eastern Long Island for serious investors. More than 100 people attend the four sessions, with 25–30 at each one. The participants include hedge fund, private equity and real estate billionaires, venture capitalists, an academic and some corporate leaders.

Larry Kotlikoff will share some provocative ideas on what caused the Great Recession. As you’ll read, he demolishes the explanations Wall Street and Pennsylvania Avenue want us to believe. Instead, he argues that our financial system was built to fail, failed spectacularly, and was then rebuilt to die another day.

China’s currency depreciated this week, with the exchange rate rising to more than 7.0 renminbi per US dollar, unnerving investors worldwide. Here’s the good news: we don’t think the decline is as worrisome as it may seem.

There are good reasons to think we could once again see some fiat currencies disappear. If so, what “something else” will be money in the future?

It would be nice to have a more personal discussion with my clients and not just always talk about portfolio results.

I will share some general thoughts and observations about things I see, teach and understand about the challenges financial advisors face. Here are five themes to consider.

I want to share an impressive study on happiness. The ramifications of its findings are profound.

The decade of the 1990s in India was an era of rapid change. The sudden rise of new choices and shifts in consumer preferences was stunning, in hindsight.

This is the third in a series of posts focusing on the formula of advisor value. Here we discuss the cost of basic investment-only management—which is not only worthwhile, but necessary. Yet it should also be a warning sign if your value proposition is based solely on your investment management prowess.

Clearly there is an opportunity for advisors to leverage Batman’s uncanny ability to adapt and prepare.

Like Batman, investors cannot resort to superhuman powers when investing. Instead, knowledge, analytical skills and ingenuity are paramount for success. Asset allocation, diversification and risk management are essential dynamics to consider as volatility moves higher.

Stocks surged last Friday following a U.S. jobs report that, to put it mildly, fell far below expectations. At first, this might seem counterintuitive. Shouldn’t signs of a slowing economy act as a wet blanket on Wall Street?

The Northern Trust Economics team shares its outlook for U.S. economic growth, inflation, unemployment and interest rates.

Thirty years ago, troops descended upon Tiananmen Square to forcibly remove protestors who were agitating for democracy, an end to corruption and a more inclusive political system. Details remain unsettled, but hundreds of students were killed or injured.

Banks’ lending standards for C&I loans (typically to large businesses) tightened quite a bit in Q1, which bodes ill for both investment and overall economic growth going forward. Private investment and industrial production data seem to have confirmed the ongoing slowdown.