Todd Rosenbluth, Head of ETF & Mutual Fund Research, CFRA Research, looks back at the 2019 Wealth/Stack conference, and why research tools can help free up advisor resources to meet client needs.
Last week CFRA presented the latest ETF trends at the inaugural Wealth/Stack conference, an event combining investing and technology that was attended by more than 700 financial professionals. Financial advisors were 70% of the attendees and this group collectively manages half a trillion dollars in client assets. We came away excited that our stock and funds research is available to these -- and tens of thousands of other passionate advisors, who are prioritizing financial education and using technology to better support their clients.
Kicking off the conference, Josh Brown, CEO of Ritholtz Wealth Management and one of co-creators of Wealth/Stack, told the audience that “Advisors can help clients through the very uncertain present with our words, our actions, our empathy, our ability to contextualize, our optimism and our realism.” Brown further added that “a good advisor is both coach and quarterback; on-demand psychologist and reliable friend; historian and futurist. The technology becomes increasingly important in a business as competitive and demanding as advisory.
During the conference sessions and through informal networking, we found advisor presenters and attendees working to help each other with practice management, social media/marketing recommendations and the use of technology to free up resources. Rather than appearing to be competing, the advisors in attendance were collaborating and sharing best practices. Yet, in some cases, we found they were less aware that through their firm or clearing partners, they have access to CFRA’s research and recommendations on approximately 1,500 stocks and a similar number of ETFs that incorporate holdings-level research.
Such tools can be helpful, which is especially clear after sitting in on some of the investment-focused sessions at a conference like Wealth/Stack.
For example, during a session on Using ETFs to Solve Client Problems, Ed Rosenberg, Head of ETFs for American Century Investments highlighted that under the hood everything is different even as asset managers work to come up with a cute name or ticker to garner interest.
Indeed, the ticker for American Century STOXX US Quality Value ETF (VALQ), which launched in January 2018 but is already rated by CFRA, evokes a combination of value and quality attributes in portfolio construction. According to our research, five of VALQ’s recent top-10 holdings have CFRA Buy or Strong Buy recommendations and seven of the ten have S&P Quality Rankings of B+ or higher, highlighting their consistent dividend and earnings records in the past ten years.
On the ETF panel, Rosenberg was joined by Rich Powers, head of ETF Product Management at Vanguard, who highlighted that advisors need to go deeper than the expense ratio when building client portfolios. CFRA agrees and while Vanguard Value Index (VTV) has a lower expense ratio than VALQ – 0.04% compared to 0.29% -- VTV has six of its top-10 holdings as CFRA Buys and Strong Buys and a similar number with B+ Quality Rankings.
During the breakfast workshop that CFRA was part of at Wealth/Stack, The Battle of the ETF Pundits, a debate occurred about how advisors are increasingly looking at smart-beta ETFs as a replacement for more expensive actively-managed mutual funds as well as individual stocks in client portfolios. While some panelists viewed the recent smart-beta inflows as far smaller than market-cap weighted and broadly diversified ETFs, CFRA explained that many advisors that were once stock jockeys have transitioned their practice to implementing ETFs and freeing up resources to help support other client needs. CFRA research on stocks and ETFs can be found on MarketScope Advisor.
