The future of advice


By Jeremy Schwartz, CFA, Executive Vice President, Global Head of Research, WisdomTree

In a recent “Behind the Markets” podcast, Liqian Ren and I were joined by two guests to discuss all things Federal Reserve (Fed) and the implications (or lack thereof) for the markets, and investment strategy and financial advice.

Timothy Duy, an economics professor at the University of Oregon, discussed his views on the impact that current Fed policy is having on the economy.

In the second half, Josh Brown, CEO of Ritholtz Wealth Management, talked about investment strategy and financial advice.



Goldilocks Economy

Tim Duy sees no signs of our record economic expansion easing; you may have had fears of recession at the end of last year, but he sees no signs of it.

He described the batch of economic data released this past Friday as a “goldilocks” report, marked by solid job growth, wage growth and steady unemployment.

Duy is not overly concerned about the inverted yield curve, saying it only becomes particularly worrisome when the inversion occurs alongside a policy of continual Fed rate hikes.

Given that the Fed has telegraphed a pause in the rate-hiking cycle, Duy doesn’t think the recent inversion is the beginning of the end.


Partisan Fed

Although he believes the Fed shouldn’t have carried out the December rate hike, Duy thinks that 25 basis points is not a substantial factor and one that can be recovered from.

Changing focus to Trump’s recent nominees for the Federal Reserve’s board of governors, Duy sees the potential for a disturbing shift toward partisan appointments.

He noted that traditionally, these positions have been filled by neutral and qualified candidates regardless of the White House administration.

Duy fears that Herman Cain could simply be a Trump spokesman and might not bring any objectivity to the Fed during a pivotal point for the U.S. economy. Duy added that he believed anyone arguing for a return to the gold standard should not be appointed to the Fed.


Financial Advice

Josh Brown recently started a new video series with CNBC as well as a partnership with Acorns that aims at helping younger people understand the core principles and mindsets behind investing.

Brown also reflected on fintech startups, such as Acorns and Robinhood, that allow young investors to trade small amounts of money at relatively high frequencies.

While they may have non-traditional ways of charging fees (e.g., Robinhood) or charge high amounts for low balance savings in terms of pure AUM, Brown believes these businesses are providing a great service for their clients and that their fees are appropriate. He asked what the alternative might be—would it be better that people not save than use an app like Acorns?


Diversified Portfolios

Brown made a great point that, in financial services there are no winner-take-all monopolies. If you do not like the services of these new businesses, you’re free to go somewhere else.

Discussing Ritholtz, Brown emphasized the firm’s focus on building globally diversified portfolios that exclude any sector focus or speculation on individual stocks.

Brown believes a critical testament to Ritholtz’s process is that the firm “eats its own cooking” and the models available to employees in their 401(k) plans are the same asset allocation strategies that the firm offers to clients.


Expansion Plans

Ritholtz continues to build out its advisory team across the country, and I asked what cities are next in expansion plans.

While they are mostly looking for the right people, rather than the best city, Brown admitted that Houston, Dallas and Washington, D.C., are on his wish list for those advisors who see the world like the Ritholtz team does.These were two great conversations; please to listen to the full podcast below.



Versions of this article first appeared on the WisdomTree blog on April 9.


Photo Credit: Wonderlane via Flickr Creative Commons


Disclosure: Certain of the information contained in this article is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. WisdomTree believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.

About the Author: Jeremy Schwartz, CFA, Director of Research, WisdomTree Asset Management is responsible for the WisdomTree equity index construction process and oversees research across the WisdomTree family. Prior to joining WisdomTree, Jeremy was Professor Jeremy Siegel’s head research assistant and helped with the research and writing of Stocks for the Long Run and The Future for Investors. He is also co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” Jeremy is a graduate of The Wharton School of the University of Pennsylvania and currently stays involved with Wharton by hosting the Wharton Business Radio program “Behind the Markets” on SiriusXM 111.


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WisdomTree Asset Management, Inc. (“WisdomTree”) launched its first Exchange Traded Funds (ETFs) in June of 2006, and is currently one of the largest Exchange Traded Product (ETP) sponsor globally. WisdomTree offers Exchange Traded Products (ETPs) covering domestic, international and global equities, fixed income, currencies, commodities and alternative strategies. WisdomTree pioneered the concept of fundamentally weighted ETFs and active ETFs and is currently an industry leader in both categories (as measured by assets under management). WisdomTree is the only publicly traded asset manager exclusively focused on the ETP industry. WisdomTree is listed on the NASDAQ Global Market under the ticker: WETF.