Tech has made investment trades faster, not necessarily better, says Napa Valley wealth adviser
Jack Oliver, managing partner with RBO & Co. in St. Helena, answered questions about wealth management from the Business Journal.
What difference does the age of a client make in what you suggest to them as an investment strategy?
We believe all investors should strive to achieve the best risk-adjusted returns attainable, regardless of age. Individuals all share the risk of “life inflation” as the cost of health care, education, housing and a comfortable retirement increase much faster than reported statistics. Therefore, we do not segment clients based on age, but on individual circumstance.
How do you help a client determine what level of risk they are comfortable with when it comes to investing their money? Are there key questions you ask to assess that risk?
We work with a client to identify what is truly investment capital versus what is savings or liquidity capital. We urge clients to keep savings capital uninvested and only have us work with capital free from restrictions for the next five-plus years.
With faster technology, algorithms to pick stocks and instantaneous investments, are clients making more frequent moves with their money, not being content to stay with investments for the long haul? What do you tell them if you consider this approach unwise?
RBO & Co. is a fully discretionary investment manager and acts on behalf of its clients to invest their capital. We believe frequent investment changes are more likely to be unsuccessful and tax inefficient.
Therefore, we employ a very low turnover strategy with an implied 10 year holding period. In some cases, faster technology is a detriment to investors, as it allows more negative human behavioral traits to be exercised immediately, whereas the lack of technology of yesteryear provided for multiple checks and balances.
What is your best advice on planning for a financially secure future?
Spend less than you make after-tax each year. Save and invest the difference in a solid investment strategy.