For those with significant assets, 2012 offers unique opportunity
At a time when investors face widely swinging markets and an uncertain legislative outlook, several North Bay wealth advisers maintain that a long-term approach remains the core of a sound wealth management strategy. North Bay Business Journal asked advisers to comment on the current investment climate, the top concerns of clients, current pitfalls and how upcoming economic and legislative events might affect the world of wealth management.
The advisers are presented alphabetically. Some responses have been edited for length.
Eric Aanes is president and founder of Larkspur-based Titus Wealth Management. With more than 19 years of experience in financial services, he has held senior positions at a number of asset management firms.
“The economic climate of today appears to be one of constant flux. We are in a period of time where there is little certainty in the world and this has been going on for several years now. We don’t see any change on the horizon given all the political and economic headwinds the global economy is facing going forward.
Some major concerns of clients today are retirement income planning. While there are many computer programs that can help determine probabilities of how long your money will last, there seems to be no substitute for human interaction given all of the unknown variables in ones life. It is important to understand and monitor all the situations regarding your income on a regular basis.
Our view is you want to stay away from long term government bonds given the current low interest rate environment. Unfortunately, this creates a real yield conundrum. It’s a real question as to one’s risk budget and what they are comfortable with regarding fluctuations.
Legislative events continue to unfold, given the current deficit one could assume it’s logical that higher taxes may prevail in the future.”
Jason Gittins is a partner at Willow Creek Financial Services in Sebastopol, where he began working as an intern in 1996. He has worked with a Certified Financial Planner designation since 2000.
“Today, it is more important than ever to carefully assess a client’s entire financial situation and execute a holistic financial plan. With investor concerns about stock and bond market returns being low, the way to enhance a client’s household wealth is to be very mindful of alternative ways to build or preserve wealth. Key topics which we carefully analyze to seek opportunities to build or preserve wealth include tax planning, debt management (ie: should you refinance your mortgage), cash flow planning, insurance and estate planning, retirement plan funding (are you getting your company match?), pension and social security planning.
Our approach today would be no different than the approach six months, one year, or five years ago. Successful long-term investors have been invested through all turbulent markets, have taken advantage of the downturns by buying low, and the bull markets by selling high. They have endured both the highs and the lows, and have the long-term “wealth building” returns to show for it. The economic climate is always changing and evolving, but the fundamentals of successful long-term investing remain the same.
Health care costs create a lot of concern for clients, too. Clients need to be prepared to spend more than they may expect on health care expenses in the future. Another concern for our clients is the worry of how their children, grandchildren and those in their community (who don’t have their resources) are going to compete and maintain the good quality of life they enjoyed. We counsel our clients how to save for the next generations, and how to structure their estate plans to provide not only for their family but others in the community as well.”
Michael Gradl is senior vice president of wealth management for Redwood Credit Union with more than 20 years of experience in the financial services industry. He was named as one of the top 20 program managers nationwide in 2010 by Investment Consultant magazine.
“It’s still important to stay focused on the long-term journey and not be distracted by short-term fluctuations. Overall the economy is growing and companies are profitable, yet it’s happening at a modest pace that hasn’t gained the full confidence of impatient investors. Periods of reasonably good economic news domestically can be clouded by unfavorable information in more global markets. The European financial downturn has meant extended low interest rates in the US, and more volatile investment markets worldwide.
Six months ago, a stock market rally brought handsome returns to the brave investors who stayed in the markets after the 2008-2009 financial hard times.
We are finding many clients continue to feel unsure about their financial future. Although the markets have come a long way since the 2009 lows, they have yet to meet or exceed the highs set in 2007. Housing shows no signs of a quick return to the values of five to seven years ago so many people, understandably, feel their overall wealth has been negatively impacted.
In addition, savings interest rates are not motivating the long-term investor to think in long term. Short, safe and liquid are what many clients today are seeking.
Things to avoid: Avoid speculation with investments tied to your long-term financial goals. Avoid investing in longer-term interest-bearing treasuries or certificates. The one-year CD is around 0.40 percent and out to the 10-year treasury at 1.80 percent, and although a safe investment, two factors work against you: When interest rates finally begin to rise, you will face erosion of principal with bonds. Inflation — your buying power is losing ground as the cost of living climbs faster than the value of your investment.”
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