Goldman Sachs, NewEdge Address RIA Strategies Amid Market Risks

RIAs Should Boost Personalization And Adjust Their Investment Strategies To Navigate The Current Market Environment, Goldman Experts Say In Webinar With NewEdge Wealth
Gregory Calnon, Co-Head of Public Investing, Goldman Sachs Asset Management (GSAM); Sylvia Yeh, Sylvia Yeh, Head of Fixed Income Wealth Solutions, GSAM; Cameron Dawson, Chief Investment Officer, NewEdge Wealth; Alexandra Wilson-Elizondo, Co-CIO Multi-Asset Solutions, GSAM
Gregory Calnon, Co-Head of Public Investing, Goldman Sachs Asset Management (GSAM); Sylvia Yeh, Sylvia Yeh, Head of Fixed Income Wealth Solutions, GSAM; Cameron Dawson, Chief Investment Officer, NewEdge Wealth; Alexandra Wilson-Elizondo, Co-CIO Multi-Asset Solutions, GSAM
Jeff Berman, Contributing Editor & Reporter, Wealth Solutions Report
Jeff Berman, Contributing Editor & Reporter, Wealth Solutions Report

RIAs are finding themselves in an increasingly complex landscape where they face artificial intelligence (AI) and other technological advancements, changing client demographics, market uncertainty and emerging investment opportunities, according to Goldman Sachs experts who spoke during a recent webinar.

As a result, the path to sustainable growth and competitive differentiation has become more challenging than ever for advisors.

To navigate these rough seas, RIAs need to place a larger emphasis on personalization, and offering their clients a wide assortment of innovative investment solutions is crucial for RIAs to stand out and increase the value they provide to investors, Goldman Sachs and NewEdge Wealth investment experts said during the webinar.

The experts offered insights on current market expectations, and how they are helping their clients to manage volatility and “derisk” in the equity markets.

Additional tips provided included asset allocation, specifically how advisors can best implement model portfolios and active ETFs; what advisors need to know about alternative investments, including where they fit in a client’s portfolio; and building customized tax-efficient portfolios to help investors meet their goals.

Gregory Calnon, Co-Head of Public Investing, Goldman Sachs Asset Management
Gregory Calnon, Co-Head of Public Investing, Goldman Sachs Asset Management

Despite the challenges that RIAs are facing, there are some “emerging investment opportunities” and all these hurdles present “a lot of opportunities for RIAs who can create competitive differentiation in their businesses,” moderator Gregory Calnon, Co-Head of Public Investing at Goldman Sachs Asset Management, said during the webinar.

Goldman Sachs had over $2.8 trillion in assets under supervision as of Dec. 31. The firm is the top provider of manager-traded separately managed accounts (SMAs), with more than $289 billion in assets, Calnon said.

The firm is also a top 10 provider of asset manager-led model delivery with $14.5 billion. “We see a lot of room to grow in that particular area,” he said.

NewEdge Wealth, meanwhile, is a $17 billion RIA that’s part of NewEdge Capital Group, an RIA firm and provider of technology-enabled solutions and financial advisors, he said. The firm services over $50 billion in client assets and supports 350 financial advisors, he added.

Two Clear Survey Themes

Goldman Sachs Asset Management conducted a survey last year of 1,000 U.S. high net worth and mass affluent investors to find out what they valued most from their financial advisors, Calnon said.

Investment services that those clients valued included protection against market declines, he noted. Ninety-five percent of participants also highlighted tax smart investing strategies as another valued service, while 90% highlighted individualized portfolios and 93% highlighted income solutions given rates that are higher for longer.

There were “two clear themes that stand out from the survey,” he told viewers. “The first theme is that more is more. Investors expect advisors to provide more comprehensive solutions across their wealth needs, and clients who were given more solutions were overwhelmingly more loyal, more satisfied and gave more referrals,” he said.

The second theme was to “make it personal,” he said, explaining: “Investors want to be offered solutions that meet them where they live in specific and personal ways.”

Top Tailwind: A ‘Soft’ Landing

Calnon asked for the others’ views on the current market environment for RIAs, and what kind of headwinds and tailwinds investors needed to be prepared for.

“The setup for risk has become unquestionably more complicated,” replied Alexandra Wilson-Elizondo, Co-Chief Investment Officer, Multi-Asset Solutions at Goldman Sachs Asset Management.

Alexandra Wilson-Elizondo, Co-CIO Multi-Asset Solutions, GSAM
Alexandra Wilson-Elizondo, Co-CIO Multi-Asset Solutions, GSAM

“But we still believe that the largest tailwind for this year will be a soft landing,” she said.

Turning to geopolitical tensions, she said they are usually noise but that, “This time it feels particularly real and something that we think may potentially drive long-term returns.”

Wilson-Elizondo is also focused on the loosening labor market, driven by last year’s large immigration wave that continues at the same pace this year.

“We think it’s just starting to be appreciated or understood by both the feds, central bankers and the rest of the market” and it “would be important for corporate profit margins.”

More of A ‘Strange’ Landing

Cameron Dawson, Chief Investment Officer at NewEdge Wealth, discussed the conflicting data and lack of clarity on whether the economy would have a soft landing, a hard landing or no landing at all – in other words a strange landing.

Cameron Dawson, Chief Investment Officer, NewEdge Wealth
Cameron Dawson, Chief Investment Officer, NewEdge Wealth

“Whether it’s the labor market, where you’re seeing some fraying around the edges but not necessarily weakness within the headline labor statistic. Whether it’s the reacceleration in some manufacturing activity that we’re seeing, while other parts of the economy seem to be stalling out,” Dawson said. “All of these things tell conflicting signals and are likely a source of continued volatility for markets as we move through the year.”

She went on to predict that a significant acceleration in inflation would have to occur in order for the Fed to justify additional rate hikes. However, Dawson noted, even slight deterioration of labor data on a headline basis might prompt the Fed to “be a bit more easy to go down the cutting cycle.”

Dawson also said investors should watch GDP growth forecasts for 2024 and 2025.

Sometimes Boring Is Best

Sylvia Yeh, Head of Fixed Income Wealth Solutions at Goldman Sachs Asset Management, pointed out that advisors and clients should focus on both the risks that they seek to address in portfolios, and how potential solutions to them could trigger other risks.

Sylvia Yeh, Head of Fixed Income Wealth Solutions, GSAM
Sylvia Yeh, Head of Fixed Income Wealth Solutions, GSAM

“Derisking, when we think about it, really isn’t one- dimensional,” Yeh said. “Broadly speaking, clients are derisking or repositioning by shifting their asset allocation towards more stable or risky investments, such as fixed income securities. We’re seeing the inflows. Clients are increasing their bond allocation, particularly the high-quality bonds. And, more importantly, the message here is they’re letting those bonds be bonds.”

She noted that bonds are intended to provide stability by generating income and reducing portfolio risk.

“I joke about this but when we’re thinking and talking about bonds, boring is great … Clients want the predictability in these portfolios,” Yeh said.

Jeff Berman, Contributing Editor & Reporter at Wealth Solutions Report, can be reached at ContributingEd@wealthsolutionsreport.com.

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