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Mar 16, 2023

Job Well Done

The best financial advisors always work hard, but right now, even more so, because there is so much uncertainty. Half of advisors’ clients are in the final years of their working careers and will transition from earned income to investment income. That’s a daunting time for clients, and a big responsibility for advisors. The other half of clients are already retired and have suffered from a shortage of yield for many years.

2022 was a difficult year. The S&P 500 was down 19%, Nasdaq was down 33% and the EAFE was down 17%. Even the 10-year treasury was down 16%. Entering 2023, most economists were in agreement that a recession was inevitable. However, they disagreed on timing and severity. Relative to the stock market, most investment strategists disagree on where the S&P 500 will finish the year, but there’s a consensus that volatility will be uncomfortably high.

Financial advisors are debating weighty questions right now. Is the traditional 60/40 asset allocation back in favor? Do I commit to bonds now or wait to see what the Fed does? Is active or passive likely to outperform over the next 12-18 months? Should I dollar cost average into the market and, if so, over what time frame? Since state taxes will likely rise, is now the time to buy municipal bonds?

Advisors take their clients’ goals to heart. Chief among them is generating enough investment income from age 65 to age 95, a total of 30 years. Long-term growth is essential too because of inflation. Lastly, advisors can't overlook the potential challenges of age-related health issues, such as the threat of Alzheimer’s and other debilitating diseases. It’s the investment equivalent of an Ironman Triathlon (2.4 mile swim, 112 mile bicycle ride and 26.2 mile race).

Ten-hour work days are now twelve-hour days. Advisors are also reading more research. They’re collaborating more regularly with colleagues. They review client portfolios constantly. They hold portfolio managers accountable for performance. Best of all, they are calling clients regularly with up-to-date market commentary and performance reports.

I work with advisors who are amongst the industry’s best practitioners. Importantly, I am inspired by their work because of the impact it has on their clients’ lives.

Paul Sullivan
Founder and Managing Partner
Wealth Management Independence