1) Financial Advice Industry Is Getting Younger as More Firms Invest in the Next Generation, TD Ameritrade Institutional’s FA Insight Finds TD Ameritrade | 8/9/2017
Because… Hiring graduates for client-facing and revenue-generating roles is one solution to the industry’s talent shortage. While young advisors know how to connect with younger clients better, older generations may not have as much trust in them due to their lack of experience. Equipping young professionals with investment knowledge and keeping them abreast of industry developments should give young advisors more confidence in front of their clients. To help them succeed, financial firms could also hold conferences that talk about career opportunities, qualities needed to be successful, best practices of more seasoned advisors, and tools and resources that they can tap into.
2) ETF Closures Outpace Prior Year; Launches Lag ETF.com | 8/11/2017
Because… More ETF closures and fewer launches indicate the ETF industry is moving into a more mature phase. ETF providers are reevaluating their product lines and not rushing into new fund introductions. As of the end of June, there were 1,982 ETFs in the Morningstar database, with 1,065 ETFs having assets of less than $100 million. In other words, only 46% of ETFs held more than $100 million in assets. Smaller funds, especially the 870 ETFs with assets less than $50 million, will be more challenged due to their lack of scale. With more firms entering the foray, it has become increasingly difficult to identify a unique value proposition and stand out from existing players.
3) Organizational Announcement: Gerard O’Reilly to Become Co-CEO Dimensional Fund Advisors | 8/15/2017
Because… This is the second major management change DFA has had this year. In February, Dave Butler succeeded founder David Booth as co-CEO of the firm. While the departure of Eduardo Repetto, DFA’s co-CEO and co-CIO, is surprising, we do not expect the change to have any significant impact on the firm’s sales momentum. DFA, with $380.4 billion of assets in the U.S. retail market, is the eighth largest asset manager. Its net inflows of $22.4 billion this year through July made it the third best-seller in the industry. The firm’s co-CEO model, emphasis on its enhanced indexing approach, strong performance track records, and deepened relationships with RIAs should continue to take its sales to new heights.