Financial advisors are facing a myriad of challenges from robo-advisors to the DOL changes, to providing viable income solutions for their clients while being appropriately compensated. Current industry options have not been meeting the needs of advisor clients who were looking for reliable income and distributions. Most income products are antiquated and haven’t kept up with today’s technology. Advisors we work with have been asking for new income and distribution solutions.
Investors are also facing challenges. We are in unprecedented times, equities are near all time highs and interest rates are near all time lows. On top of that we are about to see the largest transition of wealth in our country’s history. Social security won’t solve for the fact people are living longer, health care costs are on the rise, individuals have underfunded retirements, and yields are historically low.
We met these challenges that are facing advisors and their clients head-on by providing liquid, modern solutions that just are not available to most investors.
As a fee-based turnkey asset management platform (TAMP) for financial advisors, we are constantly asked to reinvent how advisors can use investment products. For advisors looking for modern income and distribution solutions, we’ve met this challenge by creating two new income-oriented separately managed account (SMA) portfolios: the Strategic Income model is designed to generate reliable income and the Dynamic Distribution Strategy is designed to sustain client distributions. Both income models are scientifically engineered using quantitative propriety methods and managed by multiple managers, that use different strategies, who have passed stringent due diligence processes.
The investments in the Strategic Income model are managed by a combination of strategic and tactical managers and they are designed to capture the upside of the market while protecting on the downside. The goal is to provide advisors and their clients peace of mind that their goals and objectives are being met as best as possible.
The more conservative portfolios contain more investment grade and tactical fixed income which are usually managed by tacticians. The more aggressive portfolios contain more high yield debt, preferred stock, and equities that are both strategically and tactically managed.
Cash for distributions is raised using ‘Smart Distribution’ methodology which uses cash on hand first, then sells securities that are over weighted according to their targets. The highest priced tax lots of each security are sold first for tax efficiency.