The Times, They are A-Changin’ for Wealth Management. Quorus is Here to Help.
Overview of the Quorus product and its benefits.
Bob Dylan once said, “the times they are a-changin’.” This is especially true for wealth management.
Infrastructure improvements, specifically zero-commission equity trades and fractional share recordkeeping, have unlocked new ways to build investment portfolios with individual stocks and bonds. Like mutual funds and ETFs, these next-generation personalized investing vehicles (such as Quorus) are low-cost, diversified, and professionally managed. However, in addition to the general benefits of mutual funds and ETFs, personalized investing vehicles also provide unparalleled personalization and allow advisors to tailor any strategy to fit a client’s unique tax situation and values.
These investment products go by many names: direct indexing, personalized investing, custom indexing, personalized indexing, separately managed accounts, model portfolios, and more. For the sake of simplicity, let’s refer to them as personalized investing products. While the names are different, the fundamental premise is the same. Instead of buying shares of an investment product like a mutual fund or ETF that owns stocks, the investor or their advisor uses software to purchase stocks directly in their account.
ETFs and Mutual Funds vs. Personalized Investing
These products can act as a robust tax management tool for investor portfolios. Studies by several firms demonstrate personalized investing products’ ability to boost after-tax returns. A recent paper from Vanguard estimates that tax loss harvesting an individual security portfolio can increase after-tax returns by up to 3.10% annually for certain investors. That equals significant, measurable funds flowing back into investors’ portfolios each year.
In addition to adding value through tax efficiencies, personalized investing products such as Quorus also provide an easy way to tailor investment strategies to an investor’s values for a highly personalized customer experience. Instead of using generic values-based mutual funds or ETFs that may not perfectly align with an investor’s specific requirements, personalized investing products make it easy to fit any strategy to the investor’s particular needs. For asset managers, this provides new opportunities to engage clients and demonstrate value.
The shift to these personalized investment products has already started. A recent study by Cerulli projects that these products will be the fastest-growing category of investment vehicle over the next five years. Change in the asset and wealth management market creates opportunities. Vanguard and Blackrock capitalized on the rise of passive investing to become industry leaders. Independent, fee-based advisors are winning the next generation of wealth management.
Projected Growth of Investment Vehicles, 2021-2026E ($ billions)
For personalized investing, this moment of change creates a window of opportunity for early adopters to differentiate, and to be ahead of the curve. Quorus is ready to help firms that are prepared to lean into the shift. However, this moment won’t last forever.
To those who want to unlock a new way of investing: we’re ready when you are. To those who tend to wait and see: don’t wait too long. Because the times, they are a-changin’.
Disclosures
All investing is subject to risk, including possible loss of principal.
Quorus Inc. ("Quorus," "we," or "our") is an investment adviser registered with the Securities and Exchange Commission ("SEC"). Registration does not imply a certain level of skill or training.
The material presented is for informational purposes only and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Investing in securities involves risks, including the potential loss of money, and past performance does not guarantee future results. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes and may not reflect actual future performance. Nothing in these materials should be construed as personalized investment advice, which can only be provided in one-on-one communications.
Tax-loss harvesting and tax-aware management seek to improve after-tax outcomes but do not guarantee any tax result, and their effect depends on a client's individual circumstances, including tax rates, holding periods, and other activity in the client's accounts. Quorus does not provide tax or legal advice. Clients should consult their own tax and legal advisers.
Certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, Quorus has not independently verified such information and makes no representations about its accuracy or its appropriateness for a given situation. Hyperlinks to third-party content are provided for convenience and are not an endorsement of that content.
Opinions expressed are those of the author as of the date published and are subject to change without notice. Charts and graphs are provided for informational purposes only and should not be relied upon when making any investment decision.
A copy of Quorus's current Form ADV Parts 2A and 2B, which contain important information about our advisory services, fees, and disciplinary history, is available upon request.