A wealth management expert provides a comprehensive, ongoing financial strategy that integrates all aspects of a client’s finances. That includes investment management, tax planning, estate planning, and more.
Market volatility can be an excellent time to talk with clients about their goals, risk tolerance, and financial plan. It’s also a perfect opportunity to remind them of the benefits of a long-term approach to investing.
While asset managers often earn a fee based on a percentage of their assets, wealth management takes a more holistic view and seeks to protect and grow a client’s wealth. This means a wealth manager will take the time to understand the long-term objectives of a client’s financial situation and take steps to ensure that their investments have protection down the road.
A vital part of this involves a client’s overall portfolio, including non-market assets like cash savings and real estate. A wealth management expert like Fred Baerenz will remember these when strategizing their client’s investment plan and can help them build a diverse portfolio.
Market volatility will never disappear, and it’s important to ensure investors don’t react emotionally to short-term dips. By focusing on their goals and staying true to their plans, investors can avoid making bad decisions that could jeopardize their long-term results. This may also mean reevaluating the risk profile of their portfolio and rebalancing when market conditions change.
A wealth management expert like Frederick Baerenz can help guide you through turbulent markets by selecting, monitoring, and rebalancing investment portfolios. They may use active or passive strategies, or a combination of both, to help you reach your financial goals.
They can diversify your portfolio to reduce risk by investing in various asset classes, such as stocks, bonds, and real estate. This helps ensure your portfolio isn’t overly concentrated in one area or market, which can be particularly vulnerable during volatile periods.
They can also use technical and quantitative analysis to identify trends, patterns, and anomalies in data and invest accordingly. They can help you avoid chasing performance and instead focus on achieving your long-term financial goals. Whether saving for retirement, financing a child’s college education, or seeking financial comfort and stability, an actively managed equity strategy can help you achieve your life’s goals.
One of the most common investing cliches is “buy low, sell high.” But actually, doing so is nearly impossible. The problem is that people often react emotionally to market volatility, causing them to make impulsive decisions that can harm their long-term results.
Market timing is a strategy that involves buying and selling financial assets—usually stocks, but it can also include bonds, currencies, or commodities—based on predictions about their future prices. These predictions can be based on fundamental or technical analysis.
Investors who use market-timing strategies typically experience higher trading costs and may miss out on the benefits of being in the market during periods of upward momentum. Furthermore, investors who successfully execute this type of strategy incur tax consequences when they sell their securities for a profit. This is because profits are taxed at a short-term capital gains rate if sold within a year rather than at a lower long-term capital gains rate.
During periods of market volatility, it’s essential to keep in touch with clients. Rather than falling back on a technical description of recent market gyrations, this is a time to be a good listener and address any fears or concerns that clients may have.
It’s also an excellent opportunity to help them keep current market news in perspective and provide context about how this volatility fits into their long-term financial goals. For instance, if the client is worried about their equity-heavy portfolio during a market dip, you can remind them that a period of volatility is a perfect opportunity to buy promising stocks at lower prices.
Wealth management experts can help clients navigate market volatility by providing expert recommendations throughout the planning and investment process. This allows them to focus on their goals and avoid the stress of managing their finances. Using the consultative approach, a wealth management professional can glean information about a client’s needs and tailor a personalized strategy that includes a full range of financial services.