financial advisor

Can a robot really help you financially?

jim Financial advisor, invest, Investing, Investing Strategy, investment manager, investment strategy, Retirement Planning, wealth management, wealth planning strategies , , , , ,
robo advisor

We’re hearing a lot about robo advisors these days. Are they right for you?

The financial services industry is no stranger to developing new products and innovations. Years ago, it was different types of stocks and bonds, then mutual funds were launched. More recently, exchange-traded funds (“ETFs”) that mimic indexes were launched. These days, robo advice is a hot topic. While having features that are certainly attractive to some investors, robo advisors aren’t right for everyone.

But first, the “what?”

What are robo advisors?

The term “robo advisor” is actually a bit misleading. Advisors generally guide their clients through the financial planning process to help these individuals achieve their life goals.

Robo advisors are automated portfolio managers. They take a limited amount of information about a client and create a portfolio of holdings. These holdings usually include a basket of ETFs. Robo advisors require little human involvement once their algorithm has been set.

Pros and cons

Robo advisors are programmed to automatically buy and sell holdings based on a desired risk-return profile. As there is little human involvement or management, they tend to be cheaper to invest in than actively managed portfolios. They also tend to be “set-it-and-forget-it” solutions that require very little effort by individual investors.

These portfolios rise and fall according to market and macroeconomic conditions, they typically don’t make adjustments to reflect the market. Conversely, as your advisor I’ve gained a deeper understanding of your financial picture, including your long-term needs and goals. Our work together means that your portfolio is suited specifically to you. Not just to a lot of people who may simply be your age and have a similar amount of savings.

Example of robots investing versus humans investing

During periods of rising markets, robo advisors will tend to perform quite nicely. As they reflect the performance of the wider markets in which they invest.

That said, markets don’t always go up. When markets are falling, portfolios run by robo advisors will tend to drop to the same degree as their corresponding markets. Meanwhile, active portfolio managers tend to rebalance or otherwise adjust their funds to reduce the downside impact of this market weakness. Possibly even taking advantage of it. By doing so, these portfolio managers are able to negate the losses that could result from market weakness. Which is something robo advisors can’t do.

Robo advisors are also not equipped to provide all of the other services that an advisor can provide. Including access to tax and estate planning, lawyers, accountants and other professionals who can help me ensure you have a complete financial plan that truly reflects your short- and long-term needs.

Please feel free to reach out to me to learn more about the benefits of a human vs. robo advisor.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

How to Tame Market Volatility through Diversification

jim diversification, family wealth management, Financial advisor, invest, Investing, Investing Strategy, investment manager, investment strategy, Mutual Funds, retirement, Retirement Planning, Stock Market, wealth management, wealth planning strategies , , , , , , , , ,
diversification

It’s that time of the year again. Whether it’s in person or virtually, the holidays are an opportunity for more conversations with loved ones. This year, let’s strive to put some positivity into our conversations. There is a lot to gripe about, but there’s more to look forward to.  And the more we talk, the better we plan, prepare, and progress. Discussing your financial strategies with loved ones can help reinforce them or pivot according to new circumstances. And I’m ready to hear you! Knowing what may have changed this year will help us become more successful in pursuing your financial goals.

One topic that is front of mind is how to diversify your portfolio. One way to help investors reach long-term financial goals is through an investment technique known as diversification. Diversification basically means spreading out your invested money across different investments types, industries, countries, etc. Diversification can smooth out volatility of your portfolio and potentially lead to stronger returns over the long term. Helping you take advantage of the benefits of diversification is a central part of my job as your advisor.

One guiding factor behind diversification is that not all investment categories perform well at the same time. As some are increasing in value, others may be decreasing. Market volatility is the movement of investment categories going up and down.

Maintaining a well-balanced portfolio

As your advisor, I help maximize returns and reduce the risks associated with market volatility. Essentially, your portfolio represents a collection of different investments that work in harmony to help you reach your goals. One way you can achieve portfolio diversification is to divide your investments among the major asset classes. Such classes include equities, fixed income and cash.

Asset classes – A range of risks and rewards

Each asset class comes with varying degrees of risk and return characteristics. Typically, each class performs differently in certain market environments. Here’s a quick summary of each.

  • Equities (e.g., stocks)
    Equities refer to buying stocks or shares of a business, making you a part owner. This means the investor is subject to stock appreciation when the company outperforms. But also subject to the risks of declining stock value if companies underperform.
  • Fixed income (e.g., bonds, Treasury bills)
    Fixed income investors lend capital in exchange for interest. Considered as creditors, bondholders often have a priority claim in case of company bankruptcy. This makes the investments less risky. Fixed income typically provides income at regular intervals.
  • Cash (e.g., money market funds, bank accounts)
    Cash investments provide low returns versus other asset classes, in the form of interest payments. These investments typically come with very low levels of risk.

Investment funds – One-stop diversification

I can also help achieve diversification through the use of investment funds; namely, mutual funds and exchange-traded funds (ETFs). These investment vehicles represent convenient and affordable ways to access a wide range of investments.

  • Mutual funds – These are made up of a pool of assets from many investors. Mutual funds are managed by a portfolio manager. The portfolio manager actively seeks to produce greater returns than a specific market benchmark, such as the S&P 500 Index. With the large scale of a mutual fund, you benefit from professional management and can get strong diversification by gaining access to investments that would normally be inaccessible or too expensive for most individuals.
  • ETFs – These are funds that track and seek to replicate the performance of select market indexes. ETFs represent a basket of securities based on the underlying index. This allows investors to gain broad diversification across entire markets, industries, regions or asset classes. ETFs are known to incur fewer administrative costs, therefore charging lower fees to investors.

Please feel free to contact me if you have questions on the terms discussed in this article, or on how your investment portfolio is diversified.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

What to do When Receiving Life Insurance Money

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Life Insurance Money

Recently, I contributed to an article about receiving life insurance money. The Q&A is below followed by a link to Melanie’s full article on the website Meet Fabric.

So do you have an order of things/checklist that people should go through when getting a life insurance payout? 

Receiving a life insurance payout is no different than a financial plan without life insurance proceeds. People have current needs to address. These vary from paying-off debt, building an emergency fund, saving for retirement, replacing the income of the deceased, paying for the final expenses of the deceased, etc. As a financial advisor providing comprehensive planning, I look at everything for my clients. So upon receiving a life insurance payout, the families needs are addressed first. Next, a go-forward plan is built upon their current situation.

For example, the proceeds going to a family who is debt free and the surviving spouse is still able to work. The priority may be to fund a college education account and increase retirement savings. In another example, the surviving spouse is a stay-at-home parent, and carrying mortgage and credit card debt. For this family, it may be in their best interest to pay-off the debt and use the remaining funds to support day-to-day living expenses. 

Also, one of the stories included someone who received a life insurance payout and kept the money in the interest-bearing account from the company and not get a check into her account. Do experts typically advise leaving it in the interest-bearing account, or taking it out and investing it instead?

Upon the death of a loved one, we encourage the beneficiary to receive the proceeds directly. This allows the beneficiary to pay final expenses and evaluate where the remaining proceeds should be allocated. If the beneficiary already has a comfortable savings account balance, and has a long-term investment plan, than yes, investing is a better option for long-term growth than an interest bearing account. Albeit, taking on more risk.


Do you have any tips for someone that is really emotional and maybe not in the best mental space to make financial decisions? How long should they wait to make a decision? How can they do what’s “best” for their money while dealing with grief? 

There is always emotional grievance. That is why hiring a financial professional to guide you through this period is essential. Your advisor will make decisions that exclude the emotions. Part of the planning I do for clients is to run updated scenarios, with the top industry software, of their financial position including the proceeds. This removes the emotions of planning and allows the family to make the best decisions, taking into account multiple options with their proceeds. As a fiduciary, I always serve with my clients best interests, whether a death in the family has occurred or not. It is important to work with a financial advisor who operates under the fiduciary standard of care. 

Follow this link to read the entire article: https://meetfabric.com/blog/what-should-you-do-with-a-life-insurance-benefit

Click here if you would like to learn more about your options and if we can assist you with your wealth management, retirement, and insurance planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

The Great Divide – Economy and Markets

jim Economy, Financial advisor, financial plan, Financial Planning, invest, Investing, investment strategy, Market Brief, Market Commentary, Market Outlook, Retirement Planning, Stock Market, wealth management , , , , , , ,
The Great Divide - Economy and Markets

The Dog Days are here! School is back in session, some in-person, some virtual. The virus continues to be present and the economy slowly is rebuilding while the markets continue to climb. Last week indexes finished slightly up. The Dow up 1.8%, S&P up 0.64%, and Nasdaq up 0.08%. The S&P began the week rising for it’s 7th straight session in the green and briefly passed the all-time high on Wednesday. The flat performance was a result of uncertainty with economic data, the latest virus patterns, and a second fiscal stimulus package that never was.

Last Week

The S&P 500 index is close to record territory once again. The economy and the stock market seem far off. Thursday marked the 100th day since the market lows on March 23. The markets have rebounded 50% since then. A strong recovery for investors, while millions have lost jobs and over 160,000 Americans have lost their lives. Management reports on earnings calls have been surprised at the speed and scale of the demand rebound. Many companies expected a short lived drop, followed by a gradual recovery. Not so much the “snap-back” experienced.

It is encouraging that the U.S. has added back millions of jobs lost during the first wave. Last Thursday marked the first jobless claims report under 1 million since March. Also, from earnings calls, consensus views are pointing towards record breaking earnings next year. Strongly supported by interest rates, which continue to be favorable for the foreseeable future. Investor fears over companies falling into financial distress are offset by the Feds support of buying bonds and Congress spending on relief. Retail sales also rose in July 1.2% higher than June, setting a new all-time high, and another sign of recovery.

The Week Ahead

The equity markets will have their eyes on Washington in hopes of a new stimulus. On Thursday, unemployment claims will be reported and the hope is that a under 1 million trend goes on. Continuing unemployment claims are still above 15 million, however, this is much lower than the 25 million in May. Stress for parents remains as school openings have created more unrest than security. How the school year unfolds for parents will no doubt impact the workforce productivity. Some areas of the country have already started so watching closely for signs that reopening in person can be done safely is key.

At the end of the day, it is clear the markets and the economy are not one in the same. Very different directions, as reflected in year-to-date index performance; Dow down 2.1%, S&P up 4.4%, and Nasdaq up 22.8% through the close on Friday.

Have a safe week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.