Passive investing for longer term pays off, says wealth adviser at Santa Rosa's Exchange Bank

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Emily Menjou, CTFA

Vice president and personal trust fiduciary manager

Exchange Bank

P.O. Box 403, Santa Rosa, CA 95402

707-541-1250

Read more tips on and coverage of wealth management.

Emily Menjou is vice president and personal trust fiduciary manager with Exchange Bank in Santa Rosa. Menjou 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?

One general principle of investing is for clients to gradually reduce their risk exposure as they age, because older clients don’t have as much time to rebound from market risk. That said, age should never be the determining factor for a client’s investment strategy.

For example, an 85-year-old client who requires 24-hour in-home care with large medical expenses would generally warrant a more conservative asset allocation than an 85-year-old with minimal expenses who plans to leave their wealth in trust for future generations. Every client is unique and asset allocations should be tailored to each client’s individual financial goals.

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?

Each client has an individual risk tolerance and a unique set of goals, which means that asset allocation is not a black and white decision. At Exchange Bank, we get to know our clients and work to understand their goals.

Asking questions about clients’ families, careers and future plans helps build rapport and also paints a picture of what is important to each client. What does their current financial picture look like? What are their liquidity needs? What are the long term goals for their wealth? What keeps them up at night?

Once we have answers to some of these key questions, we are better positioned to advise on market exposure and the appropriate level of risk to achieve their goals.

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?

We’ve found that when our clients understand and agree with our investment philosophy, they are not typically swayed by new trends in the investment world. Communication is key, both during the onboarding process and throughout the relationship. When our clients get antsy, we remind them of the plan and encourage them to stay the course.

What mistakes do you see individual investors making in the current financial climate?

Despite all of the research out there to suggest that the markets are truly efficient, we still encounter clients who wish to time the market or make investment changes in response to our often turbulent political and economic climate.

We counsel our clients against being reactive, in favor of a more passive investment approach centered on our core principles of diversification, asset allocation and low costs. Having a plan and sticking with it is key for financial success.

What is your best advice on planning for a financially secure future?

We may not all have inherited wealth or six-figure salaries, but there are key actions that we can all take to build financial security. For starters, spend less than you earn, keep debt to a minimum, contribute to a retirement plan and make saving a habit. If you are still working, be sure to maximize your employment benefits, especially if there is an employer match.

For clients with investable assets, keep your eye on costs within your portfolio. Make sure you understand how your adviser is compensated, and understand the expense ratios within the mutual funds you own as these will be a drag on returns.

Lastly, create an estate plan with a will and a trust to ensure your assets are managed in accordance with your wishes during a period of incapacity or after your passing.

Emily Menjou, CTFA

Vice president and personal trust fiduciary manager

Exchange Bank

P.O. Box 403, Santa Rosa, CA 95402

707-541-1250

Read more tips on and coverage of wealth management.

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