Charles Schwab Reports Slower Asset Growth in July

Charles Schwab, one of the leading discount brokerage firms and custodians, saw a decrease in net new asset growth in July compared to the previous month. The company attributes this decline to a small number of advisors who had previously used TD Ameritrade as their custodian but have now shifted their business elsewhere. Schwab's integration of TD Ameritrade's accounts, following their acquisition of the rival firm in 2020, is still ongoing. Despite recent recovery in its stock price from a low of $49 per share in May, the news about asset growth caused a slight dip.

1. Navigating Inheritance Challenges: While financial advisors often focus on wealth transfer strategies, it's important not to overlook the potential conflicts arising from passing down physical possessions. Even items with little monetary value can hold significant sentimental attachments for heirs. The key is to encourage open dialogue among family members ahead of time, allowing them to express their preferences and avoid unnecessary disputes. For instance, parents might be surprised to learn that their adult children value a well-worn turkey platter more than a valuable shell collection.

2. Optimal Portfolio Diversification: Academic studies suggest that investors can achieve comparable or even superior long-term returns by holding just a few dozen stocks instead of hundreds. However, our columnist urges caution as he notes that portfolios with only a limited number of stocks carry a higher risk of experiencing significant long-term shortfalls. To mitigate this risk, he advises financial advisors to diversify their clients' portfolios more broadly, holding over 200 stocks to withstand potential downturns.

Will value stage a comeback?

In the horse race between value and growth, value stocks may be poised for a long-term comeback. Value names outperformed growth stocks handily last year but underperformed for more than a decade before that.

The new alpha for advisors

Most advisors think of "alpha" as the term for value they can add to portfolios beyond the market's return. But this columnist argues that advisors should focus on the value their personal relationship can add over and above the usual level of customer service. He argues for embracing "extreme client engagement" and warns that an alarming number of wealthy clients have more than one advisor and could bolt if they don't receive the highest standard of care.

Rockefeller hires large UBS team

A team of top New York advisors led by Angela Mwanza is joining Rockefeller Capital Management from UBS. The six-person team is setting up shop as Oryx Legacy Partners. Mwanza often includes philanthropy and socially responsible investing in advice to clients. Rockefeller says she is one of the earliest advisors to embrace sustainable and impact strategies.

Advisor Q&A – Shift towards sustainable investing

We checked in this week with Jacqui Smith of Reynders, McVeigh Capital Management for our Advisor Q&A. Smith recounts the thought process that accompanied her shift from working for fossil-fuel companies to managing portfolios with a focus on environmental, social, and governance risks. She explains why she thinks sustainable investing strategies will win in the long term. And she outlines how the firm has handled client questions about anti-ESG pushback.

Weekends Made Even Better!

Enjoy your well-deserved weekend to the fullest!