Wealth Management Post Election

Most have political opinions and that’s terrific, however, the election is over and this article will not be politically driven. Frankly, I think many of us are sick and tired of hearing about it. So if you are looking for a political rant you have come to the wrong place. But if you are interested in sound financial opinions on what to avoid and what to embrace – read on!

Economic Factors Out of Our Control

Many have been sitting on cash for several reasons – fear, market volatility, a seven-year bull market, anticipated interest rate hikes and a market correction, tax code reform, the National Debt, and lack of growth in our economy – to mention a few. With an estimated 12 trillion dollars benched on the sidelines investors are beginning to explore alternative options.

Understand these are out of our control. What is critical and in our control is how we behave and react.

In the light of uncertainty, sitting on cash feels good for so many investors. They have made a decision. A decision to lose money safely, due to inflation, in a little to no interest-bearing bank account.

Others have trouble making such a decision. Why? Emotions such as fear or greed.

Avoid Investment Emotion

Although everyone is unique with respect to their wealth management plan, historically many get emotionally involved and fall into a buy high – sell low trap. Greed and fear may promote guaranteed losing propositions. However, the leadership provided by a proficient wealth manager or financial planner may eliminate much of this panic and reaction.

The proper financial plan and strategy requires leadership. It starts with a sound foundation based on your needs. Discovering your needs takes proper questioning to formulate a suitable portfolio approach.

Stock Market Volatility

Can you embrace volatility and see it as an opportunity? In my opinion, volatility is mandatory for success as it can provide an opportunity to buy great companies on sale or to maximize profits. Higher returns necessitate volatility risk.

Why don’t most see it that way? Because many wealth managers don’t have a sound strategy or they just don’t communicate and prepare their clients for changes. This is part of the value proposition financial planners should be providing along with good risk-adjusted returns.

Can you look 3, 5 or 10 years into the future with your money? Many can but some cannot. Why? Because time horizons differ between investors. Some rely heavily on their portfolios for income while others do not. I have addressed the factors affecting time horizons in some of my previous articles.Two of the largest are anticipated income needs and how much time you have to accumulate wealth. At the end of the day, you should be clear on your goals and the plan needed to take you there. This clarity is a result of your financial planner truly understanding your comprehensive uniqueness.

Financial Planning Requires Forward Thinking

Thinking forward with leadership is critical. Buying into a product based on historical returns is not thinking forward and is certainly not the result of proper leadership. Please don’t fall into chasing the best historically performing mutual funds or investment sectors. Statistically most underperform the following year. Also, watch out for the Mutual Fund Expense Trap.

Instead, having a very clear strategically diversified portfolio may be your best bet. Yes, there is specific strategy involved with this approach. It requires hard work behind the scenes to properly structure and manage a suitable portfolio. If it didn’t require hard work, communication and leadership then what is the value in paying for it?

What Creates Investor Clarity

There is some critical information investors should be provided to promote clarity. Financial advisors should explain in detail and make sure you fully understand:

  • What you own in your portfolio and why you own it
  • The wealth manager’s buy disciplines
  • The wealth managers sell disciplines
  • The strategy the wealth manager utilizes for further clarity
  • Your unique investment philosophy and how the portfolio is suitable for you

If this service is not being provided, you should ask “why”. It is your money and there should be value provided for the dollars you paid for wealth management services. In my opinion, if these are not being provided there is most likely no real value in the management service.

Unfortunately, many learn too late that they are not invested suitably for their goals. Let me encourage you to get a second opinion. We are proud to provide this as a value added complimentary service. It is well worth your time to protect what you have worked so hard to earn.

This is not intended to give specific legal, tax or investment advice. Advisory Services offered through Nepsis Advisor Services, Inc.; An SEC Registered Investment Advisor.
Related Article “Planning for a Rich Life”

Rick Torrington

Rick Torrington, CFP® has been offering sound comprehensive financial, retirement, asset protection and wealth management advice to his clients in Sarasota and most of Florida for close to 20 years. He is diligent in his efforts to provide clarity and financial knowledge to the public through his articles and ebooks.