Compound

A better advisor tech stack starts with a more complete view of the client's financial life. Tomorrow, October 21, Compound Planning's Tim Hamilton, CFP®, CIMA® joins leaders from Orion, GeoWealth, and Pontera for a roundtable on how connected technology is changing the way financial advisors work with clients. The conversation will cover: → Bringing workplace retirement accounts, alternative investments, and held away assets into the planning process → Using AI and connected workflows to reduce operational complexity → Building a technology foundation that helps advisors deliver more personalized advice at scale If you're an advisor, join us for a discussion about what's next for wealth management technology and how firms can turn context into better client experiences. Register here: https://lnkd.in/eEGzPjsk

The economy stayed resilient in Q3. Markets were more complicated. Growth and earnings remained strong, but market leadership narrowed, bond yields moved higher, hiring slowed, and the AI investment story began shifting from growth to returns. Here are the key themes we’re watching: → Economic Growth: Economic growth remained stronger than consumer sentiment suggested. Second-quarter GDP was revised higher, while consumer spending and business investment remained solid heading into Q4, even as hiring slowed. → Earnings: Corporate earnings continued to provide a strong foundation for markets. S&P 500 earnings expectations were revised meaningfully higher during the quarter, with technology and AI-related companies continuing to lead growth. → Equity Markets: The S&P 500 rose modestly during Q3, but headline returns masked a significant narrowing in market leadership. Large-cap growth and technology outperformed while small-cap stocks declined sharply and seven of eleven S&P 500 sectors finished the quarter lower. → Fixed Income: Bonds came under broad pressure as Treasury yields rose across the curve. The U.S. Aggregate Bond Index declined sharply during Q3, illustrating the tradeoff between short-term price declines and attractive future income. → Inflation and Employment: Inflation remained above the Federal Reserve's target, although core inflation moderated late in the quarter. Hiring also slowed sharply in September, while unemployment remained relatively low at 4.2%. → Federal Reserve: The Fed raised its policy rate by 25 basis points in September, its first increase since 2023, as strong growth and persistent inflation kept pressure on policymakers. Softer inflation and employment data subsequently reduced expectations for another immediate increase. → Artificial Intelligence: AI demand and earnings continued to strengthen, but the investment story is shifting from growth to financing. Rising capital expenditures and greater use of debt markets are raising the importance of the cash flows and returns ultimately generated by AI investment. → Geopolitics and Policy: Geopolitical developments continued to influence energy prices, inflation, and interest rates. With the U.S. midterm elections approaching, potential changes in fiscal, tax, trade, regulatory, and energy policy are also moving further into investors' focus. You can read Stephen Dean, CFA's full commentary, Raising the Bar, here: https://lnkd.in/eixzsRYW P.S. Join Steve and Dimitry Farberov, CFA®, CFP® next Wednesday for our next Compound Conversation where they'll discuss all this and more: https://lnkd.in/eZyDM4kd

Q3 is coming to a close. What should you be watching as we head into Q4? Join Compound Planning's Stephen Dean, CFA and Dimitry Farberov, CFA®, CFP® on October 14 for our next Compound Conversation on the state of the market. Register → https://lnkd.in/eZyDM4kd

For every dollar of AI revenue that’s coming in, hyperscalers are still spending close to a dollar to build its infrastructure. If you're holding concentrated stock in an AI-exposed company, here's what that means: → Showing demand is not the same as showing an attractive return on every dollar that was invested. → As spending grows, utilization, pricing, margins, and financing costs are a better signal than growth headlines. → The dividing line ahead may be less about whether AI succeeds, and more about which companies earn adequate returns on the money required to build it. 👉 Our CIO, Stephen Dean, CFA, breaks down AI's return-on-capital question — and more — in his latest market update: https://lnkd.in/eZVz7hQB

The AI bubble debate is getting louder. Employees at Anthropic, OpenAI, and Cursor still aren't rushing to sell. Nicholas Garcia spoke with Business Insider about what they're doing with their equity instead. A few things Nick pointed to: 🗓️ Selling on a schedule instead of on a feeling. Only about 5% of his clients are selling out of fear, and that group is growing. Far more are setting the plan in advance, so shares sell once the stock crosses a certain price. 🧾 The tax bill is the bigger worry, not the market. After such a significant run-up, selling can come with a significant tax bill. Municipal bonds keep coming up for exactly that reason. 🏡 Cashing out for a house. Between 5% and 10% put a big chunk of their stock into a home, usually in the Bay Area. That group needs the most coaching, because plenty of people earning six figures there were living paycheck to paycheck before any of this. Business Insider covered five moves in total, including what people are doing with private investments. 👉 Read the full piece: https://lnkd.in/eFmArD-p

We talk to a lot of clients who want to invest in rental properties. But is that actually a good financial move? On paper, the calculation seems straightforward: Rent − mortgage, taxes, and insurance = return. In practice, there's more to consider: 🔧 The costs you didn't plan for. Vacancies, repairs, and maintenance can change the math quickly. 🏠 How the property fits with everything else you own. A mortgage adds leverage. One property creates concentration in a single market. And selling can take time. 🧠 The time and mental energy involved. Rental income may be passive on a spreadsheet. Being a landlord rarely is. Rental property can offer real advantages, including potential tax benefits. For some people, it's a great fit. But the decision has to account for more than the expected return. In the latest episode of The Concentrated Position, Tim Hamilton, CFP®, CIMA® and Dimitry Farberov, CFA®, CFP® discuss what to consider before becoming a landlord, and other ways to invest in real estate. 🎧 Spotify: https://lnkd.in/gfMf__z7 🎧 Apple Podcasts: https://lnkd.in/g_CGY3hg

In July, the market stopped rewarding AI spending and started asking for proof it’s paying off. S&P 500 earnings grew 47% in Q2, but that’s inflated by gains at Alphabet and Amazon, two megacap companies. Take those out and growth is closer to 29%, still strong, just not as dramatic as the headlines made it look. And it’s part of why investors are starting to ask harder questions about AI capital spending, and whether it’s turning into real earnings. If you’re holding concentrated stock in an AI-exposed company, here’s what that shift might mean for you: → Some private AI labs are priced at multiples that assume 20 to 33% profit margins for years, which is a hard bar to clear once real competition shows up. That’s the assumption baked into your paper gains → The value from AI may not stay with the companies building the models. Infrastructure, enterprise software, and power providers are increasingly where the durable earnings show up instead. →  If your equity is unvested, waiting for the “AI story” to keep working is a bet on a specific outcome, not a given. Concentration risk doesn’t go away just because the underlying technology is legitimate. 👉 Our CIO, Stephen Dean, CFA breaks down this AI shift, and more, in his August market update https://lnkd.in/gYAfjWxC 

Parents worry about trusting their kids with money. The bigger risk might be the trust that determines how they actually inherit it. Tim Hamilton, CFP®, CIMA® has seen that kind of mess up close in his own family. When his grandmother needed help, they found an annuity nobody knew existed, then other accounts the family had to piece together. In the latest episode of "The Concentrated Position" Tim and Dimitry Farberov, CFA®, CFP® discuss: → Why an old trust is worth revisiting long before anything feels urgent → The sibling who becomes the default caregiver while everyone else lives somewhere else, and the resentment that builds when nobody says it out loud → The difference between a durable and a springing power of attorney, and why getting it wrong can leave you locked out exactly when you need it most The episode also opens with what moved markets after a strong first half, from the Magnificent Seven's slump to the sharp rotation out of semiconductor names that had run up hundreds of percent. Listen to "Trust Issues" on Spotify or Apple Podcasts. 🎧 Spotify: https://lnkd.in/gVwjKrD8 🎧 Apple Podcasts: https://lnkd.in/gEYWyNMk

At Compound, we believe technology works best when it is in service of the advisor-client relationship, not a substitute for one. That's why today, we're launching CompoundAI, built directly into AdvisorHQ, our proprietary operating system for financial advisors. This release brings two new agents, General Assistant and Service Request, to help advisors execute on client work, along with a meaningfully updated Activity Monitor. CompoundAI works across three parts of the advisor workflow, bringing together the client record, surfacing what matters, and helping advisors act on it faster: → Capture holistic client context automatically within AdvisorHQ via transcripts from client meetings, all client email communications, and the Compound Dashboard. → Surface suggested and prioritized tasks via an updated Activity Monitor, powered by CompoundAI. → Execute on client work directly via CompoundAI’s growing set of purpose-built agents, including the new General Assistant and Service Request agents, inside AdvisorHQ today. For advisors, that means more time focused on the decision in front of the client. For clients, it means an advisor relationship that feels proactive, not reactive. AI will make it easier for every firm to generate an answer. The harder job is giving an advisor the context to know whether that answer fits this client, right now. That’s the work we’re building into AdvisorHQ. Read the full announcement from our CEO, Alex Farman-Farmaian 👉 https://lnkd.in/gVcWibqX

✋ Did you hear Anthropic is reportedly considering requiring all employees to have a 10b5-1 plan after its IPO? So ... what is a 10b5-1 plan, and why is that news? It's typically used by executives and employees with access to sensitive, nonpublic information as a way to plan stock trades in advance. A 10b5-1 plan lets someone set future stock sales or purchases ahead of time: the amount, timing, price, or a formula that determines them. Requiring one for every employee, not only executives, is what makes this uncommon. It can also be used voluntarily as part of a broader strategy for anyone with significant company-stock concentration. Because the plan is set up before someone has any sensitive, nonpublic information, it can let trades execute later on a preset schedule, even during periods when they'd otherwise be restricted from trading. A separate IPO lockup would still apply on top of that. Nothing is confirmed yet, but if this moves forward, it's understandable that employees may have questions about setting one up and how it fits into a broader post-IPO strategy. Jonny Jonson, CFP®, CPA, Timothy Couture, CFP®, and Marcel Pfister will be covering 10b5-1 plans and everything else on IPO planning, including selling and diversification strategies, on our Compound Conversations tomorrow. Save your spot to ask questions ahead of time or live, and get the recording either way 👉 https://lnkd.in/d2GnFzH4