Millennials are gonna have to cut back on the avocado toast if they want that MRI.
For a long time, student loans were among the greatest financial burdens Gen-Y faced. But with the oldest of the cohort pushing 45 years, much of their debt has shifted to medical expenses, according to Northwestern Mutual. The insurer found there’s been greater urgency for millennials to pay off education expenses, and some have even benefited from loan forgiveness. Savage. But at the same time, millennials are also in their child-rearing years, which comes with a whole new crop of medical bills. Low-key burn.
We recommend splurging on that cortado before your next CAT Scan. #adulting
Asset Managers Battle to Find ‘America’s Next Top Model’
It’s not just Tyra Banks who’s trying to find “America’s Next Top Model.”
The world’s leading asset managers are racing to create model portfolios — prebuilt asset allocations based on broad risk levels and investment goals — that are all the rage among financial advisors. Capital Group launched eight new models Wednesday, ranging from global growth to conservative income options, to compete with similar products from State Street and Dimensional Fund Advisors.
Cap Group said some 35,000 advisors are currently using its active ETFs and many of them were asking for the funds to be packaged into the premade portfolios, according to Scott Davis, Cap Group’s head of ETFs. Portfolio construction is handled by many advisors today, but some are simply prioritizing other areas. “They’ve a lot to juggle,” he said at a bell ringing ceremony at the New York Stock Exchange on Tuesday.
Don’t Forget to Smize
Advisors now allocate 39% of assets under management to model portfolios, up 7 percentage points from just three years ago, according to a December study by State Street. The portfolios free up time for advisors, and can even be customized to meet specific client needs. But it’s not just advisors who are singing their praises, according to the research:
- About 85% of clients said advisors can focus time on what matters to them, and that advisors are more flexible with their needs when using models.
- Some 9 in 10 clients also said advisors have more time to make better planning decisions.
Cap Group now has about $61 billion in AUM in models since launching its first product in 2016, according to a release. “ETFs are growing up in a world where advisory business practices and true financial planning are more the norm,” Davis said. “People are using models to scale their practices.”
That’s Fierce. Cap Group is also the world’s leading manager of active funds. All 22 ETFs that the firm offers, including all eight models, are actively managed. It’s a trend that is taking over the ETF industry bringing in approximately 26% of net flows in 2024, according to American Century. Of the more than 700 new ETF product launches last year, 77% were actively managed.
“The active universe is evolving,” Davis said. “[Active funds] can add value to the core of the portfolio, over and above an index blindly following a benchmark.”
Digital Estate Planner Trust & Will Lands $25 Million in Funding
Where there’s a will, there’s a way to help more clients.
Online estate planning company Trust & Will closed on more than $25 million in fresh funding this week, led by backing from Moderne Ventures, as well as investments from Northwestern Mutual and UBS. The San Diego-based company said the funds will help pay for new AI capabilities, and build out the company’s data infrastructure and new strategic partnerships.
“The majority of financial advisors still don’t have a digital estate planning tool, so that means the tens of millions of clients they work with may not have estate plans,” said Cody Barbo, Trust & Will CEO. The roughly half-dozen companies that offer digital estate planning tools have a market penetration of just about 15%, he added.