How good are the alternatives?

For advisors considering whether and how clients should take advantage of President Donald Trump’s executive order expanding access to alternative investments in 401(k)s, the verdict is split. Retirement plan recordkeepers and the Trump administration’s Department of Labor have praised the move, while industry experts and advisors warn it could lead to confusion, conflicts of interest, and harm to clients whose money moves into less-stable investments they don’t understand.

Alternatives aren’t prohibited in 401(k)s but have historically been rare due to their risks and laxer regulation. Their inclusion in the past has sparked numerous lawsuits under the Employee Retirement Income Security Act, alleging plan committees breached their fiduciary duty to act in clients’ best interests. The order aims to reduce “burdensome lawsuits” and “regulatory overreach,” offering participants greater access to private equity, private credit, cryptocurrencies, commodities, infrastructure and real estate.

Will this deliver great private market returns for clients, or open the door to conflicts? “It’s another windfall for Wall Street at the expense of retirees,” Randi Weingarten, president of the American Federation of Teachers, told Advisor Upside.

In the Record Books

Empower, one of the largest recordkeepers with roughly $2 trillion in assets under administration, welcomed the order. “By opening the door to additional types of assets, we can offer everyday savers access to the same opportunities that have historically powered institutional portfolios,” company CEO Edmund Murphy III said in a statement.

T. Rowe Price echoed the sentiment: “Reducing unnecessary litigation is an important step toward helping plan sponsors focus on delivering the best investment options for plan participants.”

Got a Bad Feeling About This

Industry veterans are less enthusiastic. Highlighting alternatives’ illiquidity, high costs, and opaqueness, Knut Rostad, president of the Institute for the Fiduciary Standard, said it’s “breathtaking” how little the administration understands advisor responsibilities. “This represents a frontal assault … on the heart of what fiduciary means,” he said in a Friday webinar.

Phyllis Borzi, former assistant secretary for the Employee Benefits Security Administration under President Obama, warned of potential conflicts of interest, with brokers and consultants receiving high commissions to push smaller employers and participants toward alts. She also questioned the timing, noting widespread concerns over Americans’ low financial literacy. “You can’t go to any convention or meeting in the investment world … without people talking about the severe lack of financial literacy among many participants and plan sponsors,” she said during the Fiduciary Institute webinar.

Risky Business. For smaller, independent RIAs managing 401(k)s, expanded alt access may not move the needle, since many already see them as too risky. N Financial Plans Founder Amir Noor likened it to a client who recently asked about investing $100,000 in a liquor store: “It’s far more likely that a liquor store is going to close instead of Amazon, so I’d rather just buy shares of Amazon.”

Whoa, nice duds.

Dan Ives, the tech analyst and Wedbush executive known for his colorful and funky attire, is taking his love of fashion to the next level. Last week, Ives dropped a set of shirts he created in collaboration with Brooklyn designer Doobie Duke Sims, a.k.a. Snow Milk. The shirts feature colorful recreations of Ives’ favorite emojis — goats, popcorn, paperclips, trophies, flames and a disco dancer — as well as a cartoon of Ives himself on the sleeve. This latest endeavour comes just two months after Ives and Wedbush launched the IVES ETF, a fund that focuses on the picks and shovels of the AI industry and which has grown to $441 million in assets.

Always one for a little eccentricity, Ives said his taste in fashion and this new project mirror his team’s approach to business and their perma-bullishness on tech. “Many investors were laser-focused just on valuation, and they missed every transformational tech stock over the last 20 years,” he told Advisor Upside. “I think we definitely stood out as a tech investor, but it’s similar to how we dress in terms of the way we stand out.”

Respect the Drip

Whether on a convention panel or one of his regular guest appearances on CNBC, Ives can often be seen wearing a pink, purple, or teal jacket on top of a floral shirt, swirling with bright neon colors. There have been plenty of client meetings over the years where Ives wore an unconventional hat or pair of sunglasses that had investors looking twice, but ultimately it’s his stock picks that they care about, he said. “If I dressed non-colorful and wore a Brooks Brothers suit, investors would view it extremely bearishly,” he said.

Ives’ goal is to spur some change in the Wall Street fashion status quo, and he plans to expand further into the business, with hats, sweatshirts and leisurewear.

GRWM. When leaders in the world of finance pursue ventures totally removed from the industry, it can sometimes be met with head scratches *cough* DJ D-Sol *cough*. However, Ives isn’t overly concerned. “I’ve never been one that focuses too much on others’ opinions,” he said. “It’s about being comfortable in your own skin.”

Financial advisors play a vital role helping clients plan and prepare for their financial futures. It’s funny that advisors don’t apply the same foresight to their own futures.

It’s no secret that developing a written succession plan is essential for effective business planning. But, a recent report by Cerulli highlights that over the next decade, more than one-third of financial advisors — who collectively manage more than $11 trillion, representing 42% of total industry assets — are expected to retire. Alarmingly, many of these advisors don’t have a formal succession plan. Are you one of them?

Read more.