Michael M. Pompian, CFA, CFP, CAIA

If you think portfolio risk management is just about diversification, think again. This article sheds light on some surprising strategies that challenge common perceptions. Here are some thought-provoking takeaways: - Did you know that reducing the number of investments in a portfolio can sometimes actually decrease risks? It's all about strategic selection. - Contrary to popular belief, actively managing risk doesn't necessarily mean more frequent trading. In fact, a hands-off approach can be a smart move. - One of the key points discussed is the importance of understanding the correlation between investments, a factor often overlooked in risk management strategies. - Asymmetric risk and the role it plays in portfolio management is explored, offering a fresh perspective on balancing risk and return. - Ever considered tail risk hedging? This article dives into this lesser-known strategy that can enhance risk management effectiveness. Share your thoughts and feelings on these unconventional risk management strategies. https://lnkd.in/ecgSpH93

Last chance to register for today’s webinar with Ed Slott and myself, discussing how you can grow your wealth management business with tax management and unpack the new secure act final regulations!

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Target Rate Funds vs. Target Date Funds: A Personalized Approach to Retirement Planning As plan participants seek more tailored solutions for retirement, the differences between Target Rate Funds (TRFs) and Target Date Funds (TDFs) become increasingly important. While TDFs have been common, they may not fully address the unique needs of each individual. TRFs, by contrast, offer a more customized and flexible approach. Here's a comparison of the two strategies and why TRFs could be the key to more confident retirement planning. Introduction TRFs calculate the specific return needed to meet each participant’s future payout, considering personal circumstances like savings, goals, and income needs. TDFs rely on standardized asset allocation based solely on the participant's projected retirement date, offering a more generalized approach. Personalization Unlike the one-size-fits-all nature of TDFs, TRFs provide individualized strategies based on each participant’s retirement goals and financial situation. TDFs group participants by retirement date, overlooking individual financial journeys. Goal-Oriented Planning Retirement planning should meet specific income needs and lifestyle goals. TRFs set retirement objectives based on income replacement, while TDFs focus on retirement dates, possibly missing individual income requirements. Portfolio Navigation TRFs dynamically adjust asset allocation based on market conditions or personal situations, using a "buy low, sell high" approach that removes emotional decision-making. TDFs follow a predetermined path with limited adjustment flexibility. Flexibility TRFs adapt to changes in participants' personal circumstances, such as salary increases or family needs, ensuring strategies remain relevant. TDFs offer limited flexibility, fixed on a projected retirement date. Conclusion TDFs offer a simplified approach but may lack the personalization today’s participants need. TRFs offer a breakthrough by tailoring investment strategies to individuals, ensuring they can navigate retirement with confidence.

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Get prepared for a successful year end by joining this webinar on Thursday where Amy and Kim will give you some great tips and answer your tough questions!

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In Agili's quarterly insights, I talk about slowing consumer demand, lower demand for labor but that household's still have plenty of liquidity. Valuations are rich but not so bad after you take out the "Magnificent 7". Last, I discuss whether buying #cryptocurrencies is investing or speculating. Enjoy! https://lnkd.in/eatmqJEN #personalcfo #feeonlypioneers #fiduciary

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New Whitepaper from Caron's Corner: In this paper we discuss new management techniques required to capture higher returns in a higher inflation regime. A new market regime is upon us catalyzed by rising inflation risks. This presents a challenge to investors seeking to compound returns at target levels with stability because it increases correlation risks. Effectively, it pushes the efficient frontier inwards and reduces risk-adjusted return potential. In this paper, we explain how we counter this adverse impact to returns in this new regime through a new management approach with the goal of achieving stable target returns. https://mgstn.ly/3QNuw0f

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When’s the right time to discuss estate planning with clients? Get started today with these nine steps.

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There is a lot of talk about the PE industry not delivering the exits they promised. PitchBook succinctly put it with the title “Behind the J-curve” in its recent in-depth analysis of distribution activity in private market funds. Another side of that story, particularly relevant for secondary buyers like us, is that many private market funds hold their assets at seemingly inflated valuations. TVPI numbers look great for most funds, but they can’t monetize their holdings anywhere near their current NAV, indicating their estimate of “fair market value” is way too optimistic. There is always a market, the price may just not be where you wish it. To a large degree, the reluctance to exit companies results from having them marked too high. Assets were aggressively written up to look good in the short-term, impressing LPs with “paper gains” to raise the next, much bigger fund. #secondaries #privatemarkets

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One of the questions I am increasingly asked about the ETF market - by all kinds of investors is – “What are active ETFs?” It's an excellent question, and there is more than one clear answer. - Active ETFs are investment funds managed by professional portfolio managers who actively select and adjust the fund’s holdings in an effort to outperform the market, deliver a specific outcome, or gain exposure to hard-to-index markets. And they do all that through the convenience of the ETF wrapper. - There is a spectrum of active ETFs. In fact, our clients have told us navigating the active ETF universe can be difficult because it is so broad. We see three distinct categories within active ETFs that help describe each category’s use case: alpha-seeking, outcomes, and exposures. We believe active ETFs are the next frontier in investor innovation, helping to shape the future of markets, and giving investors the potential to unlock more value and opportunities. BlackRock projects that global active ETF AUM will more than quadruple to $4 trillion by 2030, from $900 billion as of June 2024.* To learn more about the characteristics and growth of active ETFs – read our latest insight here: https://ishars.com/3W3YRtf *Source: BlackRock Global Business Intelligence. Data as of June 30, 2024. Forward-looking estimates may not come to pass.

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Unfortunately, as human beings, we are prone to behavioral tendencies and mental shortcuts that don’t always work in our favor. When we see or hear information—especially if it comes across as alarming—we may fixate on it in counterproductive ways. For instance, how information is presented can have a bigger impact on how we feel about it than the facts themselves. This framing bias is what convinces you to see a glass as half full or half empty. In this case, seeing a 1,000-point drop in a market index might lead you to panic and sell investments, or at least feel nervous about sitting tight. It might help your emotional and fiscal well-being to remember that “big” point drop is also a much smaller 2.6% decline. So, what’s an investor to do? First, recognize the role your emotions play in processing this kind of information. When you encounter what seems like a scary statistic, ask yourself whether it’s actually that scary. Is the stat giving you all the information you need? Is it presented out of context or hiding anything? Is it being used to sensationalize a story to snag your valuable attention? If so, it may pay to be suspicious of it. Read the full article here for more. https://buff.ly/47siX5H #financialplanning #investing #Denver

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Six years ago, I published a historical contextualization of Modern Portfolio Theory. It was a constructive criticism of how MPT is used today. The argument ended by outlining an alternative approach to portfolio management based on income streams, not asset prices. The response was near total silence. In contrast, my most recent book has gotten substantial traction in the media and the practitioner community. The topics of the two works are, of course, different, but I think that there are other reasons why one has done well and the other has not. First, in 2018, interest rates were still going down, the market was still going up, and the early cracks in the global neo-liberal paradigm had not yet signaled a definitive end to the unfettered march of capital. Why rock the boat. Everything was fine. And a portfolio approach based on income streams didn’t make much sense when there were no income streams to be had, just ever-rising asset prices. Second, I had no platform. That was one publisher’s explanation for the flop. Without social media, there could be no marketing. The tree fell in the forest and no one heard it. I will also acknowledge a third possibility—that the earlier work just wasn’t very good. But I don’t think the third explanation is so. And the conditions surrounding the first two reasons have now changed. Interest rates have stopped going down. And traditional portfolio theory has taken it on the chin the past few years without the tailwind of declining rates. It now makes sense to at least consider alternative approaches to portfolio construction, including those based on once-again material income streams. And, for better or for worse, I’ve spent the past half decade building up a modest social media presence to propagate my sins. HistoryInvestor finally has a platform, albeit not the largest or the loudest. So I’d ask you to take a look at Getting Back to Business. ( https://lnkd.in/eTCimJvn) Let me know what you think of it. And I want to thank the few, the brave who did note it at the time. They include Sean Wieland, CEPA, Jan van Eck, Tariq Dennison TEP, Marty Fridson, among a handful of others. (If I have overlooked you, please remind me and I will happily add you to the list.) And thanks to the then editors at McGraw-Hill Professional, Noah Schwartzberg & Donya Dickerson, who got the book over the finish line. They have both since moved on, but I hope their earlier efforts will not ultimately have been in vain.

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Article featuring my quotes and a link to my blog post regarding how -- or whether -- the results of the upcoming election might affect investors' portfolios.

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Thanks for having me Charles Schwab! Check out Prosperity Capital Advisors to find a tax-smart advisor to help you with proven tax management strategies today!

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The Institute for the Fiduciary Standard’s ‘Fiduciary September’ is back, offering a timely reminder of the importance of the fiduciary standard. Sanderson Wealth Management's Tucker Weppner, CFP® explores the core principles, responsibilities, and trends in fiduciary practices, highlighting how they strengthen trust and integrity in client relationships. #FiduciaryStandard #FinancialPlanning #InvestmentManagement

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Excited to chat with Jason Buck, Jerry Parker, and Eric Ryan Crittenden RCM Alternatives Investment Management Intersect Conference! Here's what on tap: Incorporating trend following into portfolios Mitigating downside risk with alternatives Ensuring you get what you pay for The future of the 60/40 portfolio Reducing portfolio volatility with alternatives The impact of inflation and stagflation Understanding Return Stacked® Portfolio Solutions portfolios Stay tuned for valuable takeaways on #AltInvesting!

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"The heart of an advisory practice is the client." Yes, JD, I agree! Listen to the latest episode of The Deep Dive with Jay Hummel where he interviews Aptus Capital Advisors CIO and Founder JD Gardner, CFA, CMT to talk about how advisors should (and shouldn't) spend their time. It's a great conversation!

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