Latest news with #EdelmanFinancialEngines
Forbes
6 days ago
- Business
- Forbes
Planner Alpha: The Power Of Diversification, Advice In Trying Times
Amin Dabit, SVP, Traditional Wealth Planning, Edelman Financial Engines. Tariffs. Inflation. Recession. Every so often, these economic themes creep into the headlines, shocking investor portfolios. But rarely does this happen all at once as it has in 2025. Yet, at our firm, clients have told us they are pleased with their nest eggs' resilience. Their satisfaction is no accident—it is the result of thoughtful, strategic planning. For financial planners, turbulent times are the Super Bowl equivalent of their profession, when their expertise, empathy and quality of advice truly shine. We call this mindset Planner Alpha. Below, I will explore why financial advisors who take this holistic approach to planning tend to be better positioned to succeed for their clients. The Importance Of Durable Portfolios Crafting globally diversified, long-term investment strategies is now the industry gold standard—one our firm has long used. Such portfolios are designed to weather all market conditions and fund major life expenditures, such as a home purchase, education or retirement. Client portfolios generate real gains and losses—not theoretical returns. Great planners understand this dynamic and must constantly remind clients why their portfolios are allocated the way they are. I believe diversification remains the best way to safeguard your investments. However, in the past decade, it was often difficult for planners to convince investors to stay the course when large cap U.S. equities were outperforming most other asset classes. Many considered holding assets outside of high-growth stocks a 'tax' on returns. Recency bias obscures the fact that the U.S. hasn't always been the top-performing economy (download required) or stock market. Experienced planners have this data at the ready in moments of market upheaval. As the 'Magnificent 7' stocks experience volatility at a higher rate than broader equity markets, once muted asset classes such as international equities and bonds can provide a ballast to smooth the ride and reinforce the reasoning behind clients' financial plans. Owning The Rest Of The World Though the U.S. equity market is the deepest and most liquid in the world, it's not the only one. Financial innovations of American depository receipts (ADRs) and exchange-traded funds (ETFs) have made foreign markets more easily investible—now featured prominently in advisor-managed portfolios. Coming into 2025, blue-chip U.S. stocks carried high growth expectations. But no stock—or group of stocks—ascends forever, and the geopolitical landscape changed these expectations in just a few months. On the contrary, other developed market economies—such as the U.K. and Europe—have long had lower multiples and growth expectations. But concerns over a changing international security framework have spurred fiscal stimulus and national defense spending in Europe, driving its equity markets to outperform the U.S. At the same time, the U.S. dollar has come under pressure amid concerns about an economic slowdown and higher inflation expectations, leading to its decline against other currencies. Diversifying investments outside the U.S. helps mitigate this dollar risk. While planners follow the markets on the surface, they rarely have time to conduct deep analysis on why markets might be moving the way they are. Planners can fill some of the information gaps around market moves for clients by using research tools and commentary from investment management colleagues. The Power Of Yield Holding shares in the corporate stalwarts of Europe and Japan offers another advantage: relatively high dividend yields (registration required). And U.S. Treasurys and high-grade U.S. corporate bonds are beginning to yield returns in line with historical averages. This has been a boon for financial planners and their clients, enabling more confident forecasts of future cash flows. This contrasts with the zero interest-rate policy (ZIRP) era (2008 to 2021), when the Federal Reserve kept rates near zero to recover from the Great Financial Crisis. As the Fed hiked rates to address emerging inflation pressures, bond prices fell alongside equities, challenging their long-standing role as a defensive counterweight. Investors who initiated new bond positions in the past two years, however, locked in higher starting yields, which are closely correlated with future returns. They also stand to gain from potential price appreciation if rates fall again. While bonds have long provided stable yields, they now face competition from newly available offerings in private credit. Traditionally supported by institutional investors, private credit fund offerings have become more widely accessible to consumers and tend to have lower correlations to equities historically, offering greater opportunities for diversification. Since this product has different liquidity and risk profiles, planners need to collaborate closely with their investment management colleagues to determine whether these exposures are appropriate for client portfolios. Planner Alpha In Action In investment terms, 'alpha' means outperforming a benchmark such as the S&P 500. However, for financial planners, alpha transcends numbers: It's the tangible value they provide clients as they navigate through market conditions toward long-term success. Planner Alpha comes in many forms: • Managing expectations with the knowledge that even the most durable portfolios will experience drawdowns, some of which may be jarring. • Preventing clients from reacting on emotion and making wholesale changes to their asset allocation based on unverified information or their own fear. • Creating goals-based financial plans that clients can stick to regardless of economic or market environment. • Demonstrating the value of holding assets across strategies and geographies, even when some asset classes underperform. This mantra, 'own it all, all the time,' may not dazzle at cocktail parties, but it provides peace of mind for investors and their planners. Ultimately, we find that this approach is the best way for clients to reach their top objectives. As fiduciaries, it's our responsibility to act in our client's best interest, and creating goals-based plans specific to their needs is the best way to advocate for them and secure their financial future amid uncertainty. And, at the end of the day, isn't that what our mission as financial planners is all about? The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Newsweek
04-07-2025
- Business
- Newsweek
America Has A New Type Of Millionaire
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. A growing number of Americans are joining the ranks of the country's millionaire class, seen by some as evidence that the American Dream is alive and kicking, but dismissed by others as the result of inflation and broader economic trends outside of their control. According to a new report from UBS, an additional 379,000 Americans became millionaires in 2024, equivalent to over 1,000 per day. As a result, the United States now hosts a greater number than any other country on Earth – just shy of 24 million – and more than China, France, the United Kingdom, Germany, Canada, Japan and Australia combined. However, "not all USD millionaires are alike," the investment bank said in its report. While the traditional perception of a millionaire may conjure images of lavish lifestyles and sprawling estates, UBS noted that most of these individuals could be classed under the umbrella of "everyday millionaires" – a heterogeneous group consisting of those with assets valued at between one and five million dollars. Globally, the number of these "EMILLIs" has quadrupled since 2000 to around 52 million, who together now account for roughly $107 trillion of the world's wealth. "The American Dream today looks a little different than it used to," said Andy Smith, executive director of financial planning at investment advisory Edelman Financial Engines. "It's less about flashy success and more about setting goals, saving consistently, and making smart financial choices over time," he told Newsweek. "For many, reaching millionaire status is simply the result of years of careful planning and sticking to a plan, even when headlines make it tempting to do otherwise." Photo-illustration by Newsweek/Getty/Canva According to UBS, the biggest catalyst in the growth of this group has been rising real estate values. In the U.S., according to government figures, median home prices have risen by over 150 percent since the start of this century, with some projections pointing to a further increase of nearly 40 percent by the end of the decade. David Laibson, a Harvard economist and scholar of wealth accumulation, noted the influence of real estate prices, but also the outsized impact of the stock market on Americans' net worths, given these are often tied to market-linked pension funds and retirement savings accounts. "When the stock market rises sharply, many U.S. households become millionaires because of appreciation in their retirement portfolios, including both 401(k) and IRA balances," he told Newsweek. However, this link pulls both ways, and Laibson said a sudden downturn would see many lose their millionaire status. Against the notion that the rise of everyday millionaires signals the resilience of the American Dream, economist Damon Jones similarly told Newsweek that much of this trend stems from asset appreciation and currency inflation, rather than any real increase in how broadly attainable millionaire status has become for those without existing wealth of some sort. "This doesn't sound like we are looking at rags to riches," he said, noting that the UBS report also mentions that the U.S. has undergone one of the greatest increases in wealth inequality of any country this century. In its report, UBS also pointed to another factor that impacts America's millionaires both every day and the ultrawealthy: Exchange rates. "If one year the USD is particularly strong, this will push up the apparent growth in wealth of the US vis-à-vis the rest of the world, even if there is no underlying growth to speak of," it said, "while the opposite will occur in years when the USD weakens." Over the past few years, the U.S. dollar has maintained remarkable value thanks to its status as the world's primary reserve and transaction currency, the global popularity of dollar-denominated assets like U.S. treasuries, and the country's overall economic might. In recent years, the U.S. Dollar Index – which measures its value relative to a basket of major foreign currencies – has remained almost without fail above 100, indicating sustained strength versus its peers. However, since the re-inauguration of Donald Trump, the index has fallen by around 10 percent – the weakest first six months for a president since its introduction in the 1970s – attributed to a mix of America's growing debt crisis and the impacts of his administration's trade agenda on the country's economic outlook. Laibson also pointed to the impact of inflation and currency devaluation on the number of millionaires, telling Newsweek that the term now "punches far above its weight." "Being a millionaire in 2025 is not comparable to being a millionaire 50 years ago," he said. "A household that has a million dollars in 2025 has the same buying power of a household that had $165,000 in 1975." While America's everyday millionaires have grown in number, this is largely thanks to forces beyond the EMILLIs' direct control, and a change of fortunes for the U.S. economy could halt or even reverse these gains. But for those still hoping to break into this bracket, Andy Smith of Edelman said the key is long-term discipline and commitment to one's own financial plans, regardless of headlines and periodic economic volatilities. "Even with market ups and downs, people who stuck with their financial plan and didn't panic during tough times have seen their wealth grow over the years," he told Newsweek. "It's a reminder that saving as much as you can for as long as you can is vital, and it's also a reminder that staying committed to long-term goals really can pay off."
Yahoo
02-07-2025
- Business
- Yahoo
Why a famed financial advisor thinks crypto should be up to 40% of your portfolio
Financial advisor Ric Edelman thinks your crypto allocation is probably too low. In a new paper, he highlighted the importance of allocating up to 40% of portfolios to crypto. It's a big change after he said a few years ago that allocations to crypto should be 1%. A top financial advisor has a surprisingly high recommendation for the percentage of a portfolio that should be allocated to cryptocurrencies. Ric Edelman, founder of advisory firm Edelman Financial Engines and author of multiple investing books, recently published a white paper detailing some new investment strategies — and some new thinking on crypto investing. Edelman recommended investors allocate at least 10% of their portfolio for crypto assets and, in some cases, as much as 40%. Most financial advisors would likely recommend a much lower crypto allocation, and not long ago, Edelman would have been counted among them. In his book "The Truth about Crypto," published in 2021, he said crypto should be a much smaller part of any portfolio, at about 1%. He's changed his tune, though, advocating for an investment strategy that's highly bullish on the continued growth of digital assets. "There's no logic to omitting an asset class that's outperformed all others for 15 consecutive years and is widely projected to continue doing so for the next decade or more," Edelman said in the paper. He cited historic performance data showing that portfolios with bitcoin have generated "higher returns with lower risk." That said, Edelman doesn't think all investors should allocate the same amount to crypto. His recommendation is that conservative investors allocate 10% of their portfolios to crypto, while moderate investors target 25%. For aggressive investors, it should be as much as 40%. "Owning crypto is no longer a speculative position; failing to do so is," he said. "A passive market-weighted index comprised of all asset classes would have 3% in crypto, so an investor who lacks crypto is now effectively shorting it." Edelman also criticized a popular investment strategy. He said that the 40/60 mix of stocks and bonds, something that many investors have used to guide their decisions for decades, is "dead." He cited "unprecedented rates of longevity" generated by "remarkable advances in exponential technologies." Therefore, Edelman sees the need for financial portfolios that can generate revenue for 50 years or more. As the paper makes clear, Edelman believes that the answer to this lies in further crypto exposure. In his view, the economy is currently in the "third evolution" of the internet, a phase driven by blockchain technology, which he sees as revolutionizing how money is transferred. "Blockchain technology is evolving into the internet of money, moving value at internet speed," Edelman said. "When you can move money as easily as sending an email, everything changes." As investor and crypto bull Anthony Pompliano recently highlighted, Edelman's statements are in line with arguments that bitcoin bulls have been making for years. However, Edelman is the first prominent financial advisor to advocate for such a high crypto allocation. Read the original article on Business Insider
Business Insider
02-07-2025
- Business
- Business Insider
Why a famed financial advisor thinks crypto should be up to 40% of your portfolio
A top financial advisor has a surprisingly high recommendation for the percentage of a portfolio that should be allocated to cryptocurrencies. Ric Edelman, founder of advisory firm Edelman Financial Engines and author of multiple investing books, recently published a white paper detailing some new investment strategies — and some new thinking on crypto investing. Edelman recommended investors allocate at least 10% of their portfolio for crypto assets and, in some cases, as much as 40%. Most financial advisors would likely recommend a much lower crypto allocation, and not long ago, Edelman would have been counted among them. In his book "The Truth about Crypto," published in 2021, he said crypto should be a much smaller part of any portfolio, at about 1%. He's changed his tune, though, advocating for an investment strategy that's highly bullish on the continued growth of digital assets. "There's no logic to omitting an asset class that's outperformed all others for 15 consecutive years and is widely projected to continue doing so for the next decade or more," Edelman said in the paper. He cited historic performance data showing that portfolios with bitcoin have generated "higher returns with lower risk." That said, Edelman doesn't think all investors should allocate the same amount to crypto. His recommendation is that conservative investors allocate 10% of their portfolios to crypto, while moderate investors target 25%. For aggressive investors, it should be as much as 40%. "Owning crypto is no longer a speculative position; failing to do so is," he said. "A passive market-weighted index comprised of all asset classes would have 3% in crypto, so an investor who lacks crypto is now effectively shorting it." Edelman also criticized a popular investment strategy. He said that the 40/60 mix of stocks and bonds, something that many investors have used to guide their decisions for decades, is "dead." He cited "unprecedented rates of longevity" generated by "remarkable advances in exponential technologies." Therefore, Edelman sees the need for financial portfolios that can generate revenue for 50 years or more. As the paper makes clear, Edelman believes that the answer to this lies in further crypto exposure. In his view, the economy is currently in the "third evolution" of the internet, a phase driven by blockchain technology, which he sees as revolutionizing how money is transferred. "Blockchain technology is evolving into the internet of money, moving value at internet speed," Edelman said. "When you can move money as easily as sending an email, everything changes." As investor and crypto bull Anthony Pompliano recently highlighted, Edelman's statements are in line with arguments that bitcoin bulls have been making for years. However, Edelman is the first prominent financial advisor to advocate for such a high crypto allocation.
Yahoo
30-06-2025
- Business
- Yahoo
Popular Financial Advisor Ric Edelman Says Investors Should Allocate Up to 40% of Wealth to Crypto
Prominent financial advisor Ric Edelman says investors should consider putting as much as 40% of their wealth into cryptocurrency, a bold recommendation that reflects how far digital assets have come in recent years. 'Today I am saying 40%, that's astonishing,' Edelman told CNBC's Crypto World on Friday. 'No one has ever said such a thing.' Edelman, founder of the Digital Assets Council of Financial Professionals, has been active in crypto for over a decade. He first urged investors to allocate part of their portfolios to bitcoin BTC in 2018. In his 2021 book 'The Truth About Crypto,' he described even a 1% crypto allocation as 'reasonable' for most people. Now, Edelman believes the case for crypto exposure is far stronger, pointing to what he called a 'massive change' in the industry over the past four years. In particular, he highlighted growing political support for digital assets, especially following the election of U.S. President Donald Trump. 'Today, all those questions have been resolved,' Edelman said, referring to regulatory uncertainty and institutional hesitation. 'It's radically changed and is now a mainstream asset.' Edelman's firm, Edelman Financial Engines, manages nearly $300 billion in assets. Though traditionally known for retirement planning and wealth management, the firm's growing attention to digital assets mirrors a broader trend among financial institutions embracing crypto as a legitimate asset class. Even though Edelman described crypto as the 'best investment opportunity of the decade,' he acknowledged that a 40% allocation may not suit everyone, suggesting a more conservative 10% for those with lower risk tolerance. Edelman's recommendation marks one of the most aggressive calls from a mainstream financial figure to date. Most financial advisors in the U.S. are currently recommending well under 5% to their clients. Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy. Sign in to access your portfolio
