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Best Financial Advisors in San Diego

Best Financial Advisors in San Diego

by | Apr 15, 2025 | Financial Planning, Uncategorized

At Platt Wealth Management you can expect to partner with expert financial advisors who offer a unique and personal approach to wealth management. You deserve smart strategies built specifically for your individual needs and a financial advisor who takes the time to listen to your goals and dreams. When you work with a local San Diego financial advisor you can develop that in-person connection from a trusted boutique advisory firm. You won’t get that level of care from just anyone.

Not only does Platt Wealth Management focus on a client-first approach to financial planning, but we take our fiduciary responsibility seriously. Our team of advisors, Jeff Platt, Curtis West, and Kai Kramer are experienced professionals dedicated to understanding your concerns. They will work with you to develop a comprehensive financial strategy that fits your current situation and future plans.

By learning your goals we can look at all the ways you can get there. Then, we will tailor our strategy to meet or exceed those goals. You can reach your goals and realize your dreams, and it’s easier with the right support and guidance from financial professionals who take what matters to you seriously. Here’s what to know about us, why we’re different, and what to look for when you choose a financial advisor.

What to Look for in a San Diego Financial Advisor

Selecting the right financial advisor is a critical decision that can significantly impact your financial well-being. To ensure you choose a professional who aligns with your financial goals and interests, there are some essential criteria you want to carefully consider.

First, assess the advisor’s qualifications and credentials. Certifications such as Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA), and Master of Science in Business Administration (MSBA) indicate expertise in financial planning, investment strategies, and data-driven decision-making. For example, a CFP® has undergone rigorous training in financial planning and ethics, and a CFA specializes in investment management strategies. Someone with an MSBA brings advanced business skills to the table, providing sound advice for your financial decision-making.

Second, prioritize advisors who operate under a fiduciary duty, like those at Platt Wealth Management. We have a fiduciary duty to all our clients, which minimizes any conflicts of interest. This is a crucial distinction, because not all financial advisors are required to follow this standard.

Some may operate under a suitability standard, meaning they can recommend products that are merely appropriate but may not be the best option for you. Many are commission-based, and may choose a higher-commission product over a lower-commission option, even if it’s not necessarily the right product for your needs.

Choosing a fiduciary financial advisor ensures that your advisor is legally and ethically obligated to act in your best interest. Here’s why that matters:

  1. Fiduciaries Put Your Interests First: Unlike non-fiduciary advisors who may recommend products that earn them commissions, a fiduciary must prioritize your financial well-being over their own compensation.
  2. Transparency & Trust: Fiduciary advisors must disclose all potential conflicts of interest, ensuring you get objective and honest advice.
  3. Fee-Based vs. Commission-Based: Many fiduciary advisors operate on a fee-only model, meaning they earn money directly from you rather than commissions from financial products. This minimizes bias in their recommendations.
  4. Higher Standard of Care: Fiduciaries must follow the “Prudent Person Rule,” meaning they must make careful and well-researched decisions in managing your assets.
  5. Long-Term Financial Success: Since their compensation is often based on a percentage of assets managed (or a flat fee), fiduciaries are incentivized to grow and protect your wealth, rather than push products that may not suit your needs.

Another key to choosing the right financial professional is their fee structure. A fee-only financial planner earns compensation solely from client fees rather than commissions on financial products. This model ensures transparency and reduces the likelihood of biased recommendations. In contrast, commission-based advisors might have incentives to push specific financial products, which could create a conflict of interest.

Customization is also an essential part of selecting a financial advisor. Your financial situation, risk tolerance, and long-term objectives are unique to you, and a one-size-fits-all approach may not give you what you’re looking for. You should seek out an advisor who takes the time to understand your financial goals, whether that’s retirement planning, wealth preservation, or tax efficiency, and tailors their advice accordingly.

Additionally, evaluate an advisor’s communication style and accessibility. We want you to be comfortable talking to us, feel heard, and get your questions answered. Our advisors strive to be proactive, responsive, and capable of explaining complex financial concepts in a way that you understand.

Lastly, check out our advisors’ track records and client reviews. Research their backgrounds through regulatory bodies such as the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) for your peace of mind, to help you feel secure in choosing us to manage your funds and provide you with financial advice.

Choosing a financial advisor requires due diligence, but by focusing on fiduciary duty, fee transparency, credentials, and personalized strategies, you can make an informed decision that supports your long-term financial success and see how Platt Wealth Management can meet your needs.

Meet the Financial Advisors at Platt Wealth Management

Understanding who will be managing your finances and growing your wealth is extremely important, and you want to feel confident that you’re making the right choice.

Jeff Platt, JD, LLM, CFA, CFP® – Founder & Chief Investment Officer

  • Over 30 years of experience in investment management and wealth planning.
  • Over eleven years in commercial real estate.
  • Holds CFP®, CFA, JD, and LLM in Taxation from USD School of Law.
  • Specializes in high-net-worth financial planning, investment strategy, and tax efficiency.
  • Serves on multiple San Diego investment and financial committees.

Curtis West, CFP®, MSBA – Lead Financial Advisor

Over 20 years of experience in financial services.

  • Holds a Masters of Science in Business Administration (MSBA) and CFP® certification.
  • Passionate about helping clients develop financial strategies that eliminate uncertainty.
  • Specializes in retirement planning, investment growth, and tax-efficient strategies.
  • Dedicated to mentoring and financial education, volunteers at CalEx Experience Camp.

Kai Kramer, CFA Candidate Level 1 – Financial Advisor

  • CFA Level 1 Candidate with Series 65 Investment Adviser License.
  • Background in economics and financial research from UCLA.
  • Works on portfolio management, investment strategy, and financial planning analysis.
  • Focuses on helping clients develop long-term wealth-building strategies.

Our advisors have years of experience and dedication to clients, giving you peace of mind, support, guidance, and the information you need for comprehensive financial planning.

Questions to Ask a Financial Advisor Before Hiring Them

Before you hire a financial advisor there are plenty of important questions to ask. You want to be prepared for consultations so you can make informed decisions for your financial future. At a minimum, be sure you understand the advisor’s approach, fees, and expertise. Then, ask questions that can help you gauge trustworthiness, experience, and compatibility. Here are some of the biggest questions to ask before choosing a financial advisor.

  • Are you a fiduciary, and do you always act in my best interest?
  • What are your qualifications and certifications?
  • How do you charge for your services (fee-only, commission, or fee-based)?
  • What is your investment philosophy?
  • Do you have experience working with clients in my financial situation?
  • How will we communicate, and how often will we meet?
  • What happens to my financial plan if something happens to you?
  • How do you handle market volatility and changes in economic conditions?
  • Can you provide client testimonials or references?
  • What sets your firm apart from other top financial advisors in San Diego?

Our advisors are happy to answer your questions. We understand the value of transparency and operate with an openness you can rely on. While choosing a financial advisor should be based on what they can do for you and your financial future, you also want to choose someone you feel comfortable with and can work with for the long term.

Why Choose Platt Wealth Management?

When you need a trusted San Diego financial firm operating with fiduciary duty, you need Platt Wealth Management. We’re a boutique firm with a highly personalized approach to financial planning and a fee-only structure that prioritizes client interests over commissions, so you know you’re getting the investment advice and strategy that’s right for your needs. Unlike many independent wealth management firms, we align our services to your goals and dreams, sharing our knowledge and expertise to increase your portfolio.

We offer a range of comprehensive services, including tax strategies, investment planning, and retirement planning, so you can work on your wealth management plans for your current situation and in the long-term. Choosing a financial advisor doesn’t have to be difficult when you come to us. We understand the serious nature of making this decision, and are dedicated to making it easy for you to see why we are a quality choice for your needs.

How to Choose the Best San Diego Financial Advisor

Selecting the right financial advisor is a critical decision that can significantly impact your financial well-being, both now and for the future. To ensure you choose a professional who aligns with your financial goals and interests, there are some steps we suggest.

Step 1: Identify Financial Goals

What are your financial objectives? Before searching for an advisor, you should be clear on whether you’re focused on retirement planning, wealth preservation, tax efficiency, or investment growth. Having clear goals will help you find an advisor who specializes in your needs.

Step 2: Research and Compare Fee Structures, Credentials, and Advisory Approaches

Once you know your goals, it’s time to research potential advisors. Look for professionals like ours, with relevant credentials such as Certified Financial Planner (CFP®) or Chartered Financial Analyst (CFA). These certifications indicate expertise in financial planning, investment management, financial guidance, and decision-making.

Additionally, consider the advisor’s fee structure. Our fee-only advisors, who earn compensation solely from client fees, can provide transparent and unbiased advice that may not be offered by commission-based advisors. Before you settle on any fee-only advisor, evaluate their advisory approach to ensure it aligns with your financial philosophy.

Step 3: Schedule Consultations to Discuss Strategy, Communication Style, and Fiduciary Status

Meeting with potential advisors is crucial for assessing compatibility. During a consultation, ask them to talk about their investment strategy, communication style, and whether they adhere to a fiduciary duty. Our firm operates as fiduciaries, so we’re legally and ethically required to act in your best interest. Also ask about your potential advisor’s approach to ongoing financial planning and how often they review investment portfolios.

Step 4: Review Investment Philosophies and Long-Term Planning Capabilities

A financial advisor’s investment philosophy should align with your risk tolerance and long-term goals. Some advisors take an aggressive approach, while others focus on wealth preservation. Additionally, you should assess an advisor’s ability to develop a long-term financial plan that evolves as your life changes, market conditions fluctuate, and economic trends adjust. You want, need, and deserve ongoing support and adjustments to keep your plans on track.

By following a structured approach to finding an advisor you can confidently choose someone who understands your financial goals, which can help you experience long-term success.

Secure Your Financial Future with Expert Guidance

Choosing one of our expert advisors at Platt Wealth Management can help you grow your wealth, manage your investments, and experience peace of mind. Our fiduciary responsibility and commitment to clients comes through in everything we do, and our focus is on how we can help you see more value from your portfolio.

We’re here to help you recognize your goals and dreams, and get closer to them every day with trusted guidance and support. Schedule a free consultation today to talk about how our advisors can put their experience and expertise to work for your future.

Dream. Plan. Do.

Get Started

FAQs

What services does Platt Wealth Management offer?

Platt Wealth Management offers financial planning services including retirement planning, tax strategy, charitable giving, investment management, and custom financial planning options.

How does Platt Wealth Management charge for its services?

Platt Wealth Management is an independent, fiduciary, fee-only firm, meaning we don’t sell commission-based investment products, annuities, or insurance. When it comes to financial advisor cost, we charge only transparent fees for assets under management or flat fees for our services.

What is the advantage of working with a boutique financial firm?

Working with a boutique firm gives you the advantage of white glove services and custom strategies designed specifically for your financial situation. Our advisors understand that every client and their situation is unique, and there’s no one-size-fits-all approach.

How can I schedule a consultation with a Platt advisor?

You can schedule a consultation with a Platt advisor on our website, by emailing info@plattwm.com, or by calling us at 619.255.9554. We’re located in San Diego, CA.

Is Platt Wealth Management a fiduciary?

Yes, Platt Wealth Management is a fiduciary with the legal and ethical requirement of providing advice, services and investments that are best for you, the client.

What should I prepare before my first meeting?

Before your first meeting, make a list of questions you want to ask. You can bring financial statements and other information about your current situation, as well as thoughts about your goals and dreams for the future. Our advisors will help with the rest.

Staying Invested During Volatile Markets

Staying Invested During Volatile Markets

by | Aug 15, 2024 | Economic News, Financial Advice, Investment Management, Uncategorized

Economic Analysis by Jeff Platt and Kai Kramer

 

You may have been watching the news and wondering about the recent market turbulence. We see several main factors affecting markets at this time:

    • Unemployment rate increased from 4.1% to 4.3% in July
    • Jobs growth totals 114,000 in July, coming in lower than the expected 175,000
    • Jobless claims for the week ending July 27 climbed by 14,000 to 249,000

Additionally, the Bank of Japan raised their interest rates last week from 0% – 0.1% to 0.25%. The rise in interest rates has caused the yen to appreciate versus the dollar, which is putting an end to a common strategy called a “carry trade.” This is where investors borrow in a cheap currency to buy other (higher yielding) global assets.

 

So what are we doing about the market drop?

We have all heard the phrase, “Don’t just stand there; do something!” John Bogle, founder of Vanguard, modified this for long-term investors to say, “Don’t do something; just stand there!” In today’s investment environment, both expressions are true. This may sound familiar to many of you as it is exactly what we wrote in our quarterly newsletter of April 2020 when we saw a similar market drop at the beginning of the COVID-19 pandemic.

You might also remember how we stayed the course through that turbulent time by maintaining equity positions, rebalancing portfolios to long-term strategic asset allocation (IPS), and doing some tax loss harvesting. These responsive moves benefited portfolios.

We believe that the recent movement in the markets may be another opportunity for investors with a long-term perspective.

 

Strategically, we will continue to maintain each client’s asset allocation because even if we were 100% convinced a recession was coming and we sold out of equities, we would still need to decide when to reenter the market and we DO NOT want to miss that window.

The graph below shows how annualized returns would diminish by missing the 10, 20, 30, 40, 50, and 60 best trading days of the 21-year period between 2002-2023. During that time, the S&P 500 would have returned 9.0% annualized. If you missed just the best 10 days, the annual return fell to 4.8%. If you missed the best 30 days, your returns would be negative! This illustrates the difficulty of trying to time the market and how detrimental this could be to one’s portfolio.

Maintaining portfolio allocations is more difficult when markets experience this type of volatility. Over time, however, investors are compensated for their stock market exposure. Remember, too, that the proper asset allocation is the one you will not abandon during difficult times.

We hope this information provides you with some peace of mind at this time. If you have any questions about what you are seeing in the news or about your portfolio, please do not hesitate to get in touch.

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Your Ultimate Guide to Dividend Investing

Your Ultimate Guide to Dividend Investing

by | Oct 26, 2023 | Financial Advice, Financial Planning, Investment Management, Uncategorized

The best any expert can say about the stock market right now is that future returns will be uncertain, and volatility may be the new normal. Although there are slivers of light shining on some parts of the economy, many storm clouds darken the near to intermediate-term outlook on the stock market.

 

Make no mistake; this is not a gloom and doom stock forecast. Quite the contrary, investors should maintain a cautious optimism and remain invested in the stock market, albeit fully hedged against uncertainty and volatility.

 

One of the best strategies for accomplishing this is investing in dividend stocks as a portfolio stabilizer and a source of returns in an uncertain economy. In order to help you decide if dividend investing is right for you, we’ve put together this comprehensive guide. Of course, always consult with your financial advisor to understand what you’re buying and why you’re holding it in your portfolio.

 

What is Dividend Investing?

 

Dividend investing is a strategy focusing on investing in companies that regularly distribute a portion of their profit as dividends to shareholders. The most direct way a business can affect shareholder performance is through a cash dividend. A cash dividend is simply a return of investment to the shareholders. Each year, or each quarter, the board of directors announces a dividend that is paid in cash—sometimes in stock—directly to shareholders. 

 

The better-performing companies will periodically increase their dividends. Some companies have been paying dividends for decades, so it becomes an expectation and a way to attract new investors. Once a company starts paying a dividend, it will go to any length to continue to pay it because not doing so indicates the company may be in trouble. 

 

Creating Your Dividend Investing Strategy 

 

Not all dividend stocks are created equal. As with any investment class, it’s important to establish strict criteria for selecting the stocks that best match your profile and meet some standard of quality. Chasing the highest yields can be as risky as investing in junk bonds. Over the long term, companies with an established record of uninterrupted dividends, a clean balance sheet, and a positive earnings outlook will outperform the higher-yielding investments in terms of both dividend income and capital appreciation. 

 

When investing for the long term, diversification is always the key. With dividend stocks, you can invest across many sectors and among various dividend-paying investments, such as common stock, preferred stock, real estate investment trusts (REIT), ETFs, and mutual funds. 

 

What to Look for in a Dividend-Paying Company

 

With dividend stocks, investors need to apply the same due diligence they would use to purchase any stock, careful not to focus strictly on the dividend yield, which can be especially alluring after the stock price has fallen. It would be essential to know why the stock price fell and whether there may be the possibility of a dividend adjustment. 

 

One of the most important factors to consider is the company’s debt-to-equity ratio, which could put pressure on the dividend during a down economy if it is too high. Dividend payers that have no trouble generating excess cash flow can be relied upon to pay their debt and dividend in any economic environment. 

 

You also want to look at a company’s dividend payout ratio, calculated by dividing the annual dividends per share by earnings per share. The dividend payout ratio represents the portion of net income the company is paying out as cash dividends. Companies with a payout ratio of less than 50% are considered financially stable, with the potential to increase earnings over time. 

 

What to do with Cash Dividends

 

Investors need to decide what to do with their cash dividends. If the company is performing well and driving solid investment performance, you probably want to reinvest them back into the company. That drives investment performance further. However, if the multiples become unattractive over time, reinvesting in the company may not make sense. That should prompt a decision as to whether the stock is still attractive.

 

Whether you hold or reinvest your cash dividends in the company, they are subject to income taxes. The advantage of dividend income over other forms of income is it is taxed at a maximum rate of 20% (plus a 3.8% surtax for the highest-earning taxpayers). The tax rate for taxpayers in the lower tax brackets is 15%. 

 

Why Now Is the Time to Invest in Dividend Stocks

 

While high-quality dividend stocks are not likely to generate market-leading returns in any given year, they will lose less money on the downside, which is the key to growing portfolio value over the long term. Investing in high-quality dividend stocks is not about generating outsized returns; instead, it is about generating a rate of return meaningfully greater than the inflation rate while preserving capital during protracted market declines. Dividends are always positive, so they are a counterweight in down markets.

 

Many investors are unaware that dividend yield and growth have accounted for approximately 40% of long-term stock returns since 1930. During decades when inflation averaged more than 5%, they accounted for 54%. 

 

Eventually, the U.S. economy will right itself, and sanity and stability will return to the markets with large-cap, dividend-paying companies leading the way. Until then, and even then, dividend stocks will provide an effective counterweight to most risks investors will encounter, including inflationary pressures (or stagflation), increased market volatility, interest rate fluctuations, or market declines. There has never been a better time to make dividend stocks an integral part of your investment portfolio.

 

Adding a dividend stock component to your portfolio will not only increase your tolerance for volatile markets, but it can also become an enduring source of income regardless of the movement of stock prices, inflation, and interest rates. 

 

Ready to find out if dividend investing could be the ballast you need in uncertain times? Or perhaps a source of income you could use to fund your future retirement?

 

No matter where you are in your investing or retirement journey, our team at Platt Wealth Management can help. Simply schedule an appointment with one of our trusted advisors to discuss your opportunities today.

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

10 Money-Saving Tips for Planning Your Next Vacation

10 Money-Saving Tips for Planning Your Next Vacation

by | Oct 24, 2023 | Financial Advice, Financial Planning, Lifestyle, Uncategorized

Vacation travel is on the rise, but so are travel costs. Increasing demand is driving up gas prices, hotel, and airline costs, making planning the perfect vacation challenging for most people. However, with some thoughtful planning using these cost-saving tips, you can stretch your travel bucks a lot further on a memorable vacation.

 

Set a Strict Budget

 

Don’t start booking travel until you determine how much you can afford to spend on your vacation. Allocate specific amounts for accommodations, transportation, food, activities, and souvenirs. It helps to get a baseline understanding of costs associated with where you’re going to see how realistic your budget is. 

 

Travel During Off-Peak Seasons

 

Traveling during peak season ensures you will pay higher prices. You’ll find more affordable options when you plan your travel during off-peak seasons or less popular months, and you’ll avoid crowds. Studies show that airfares for holiday season travel averaged 41% more than those booked for non-holiday season travel. They also show an average of 25% savings when booking flights six months out as opposed to one to two months out. 

 

Be Flexible with Dates

 

Flight and hotel prices can fluctuate significantly from one day to the next. So, be flexible with your travel dates and use fare comparison websites to find the lowest-priced travel days. For example, flying on Tuesdays, Wednesdays, and Saturdays is typically cheaper than flying on Mondays and Fridays, which are busy commute days.

 

Open a Travel-Friendly Bank Account

 

Whether you’re going on a big trip or a small one, it’s likely you’ve been putting money away to make the trip happen for some time. It’s often helpful to keep this money in a separate account so you can see how much you’ve accumulated in advance and track spending more easily while on the trip. It’s hard to see what you’ve blown through on a trip so far when you’re looking at your everyday bank account with bills and other reoccurring charges coming out.

 

Plus, you’ll want an account for traveling that allows for unlimited ATM withdrawals abroad and won’t charge you transaction fees. This is huge and can easily save you hundreds of dollars!

 

Consider Alternative Accommodations

 

Look beyond traditional hotels. You can often find great vacation rentals through Airbnb and Vrbo, which can be more cost-effective, especially if you’re traveling with a group of people. Watch out for those extra fees, though. Make sure you know what you’re signing up for before you sign your entire entertainment budget away in exorbitant cleaning fees!

 

Save While You’re There

 

Travel budgets tend to blow up around all the small stuff, such as dining out, transportation, activities, and souvenirs. While it’s fun to splurge once or twice at a nice restaurant, you can save a substantial amount of money by dining in, which is why it’s essential to find accommodations with a kitchenette. 

 

You can also save by shopping for groceries and snacks so you can always have food on hand. Also, you won’t have to buy expensive bottled water at the airport or in tourist locations if you pack your own water canister. 

 

Research Free and Low-Cost Activities

 

The costs of activities and attractions can often exceed other travel costs. Get the most out of your vacation bucks by looking for free or low-cost activities like free walking tours, museums with free entry days, and outdoor activities like hiking or picnics to layer on top of a couple of well-chosen attractions. 

 

Pack Light

 

If possible, confine your packing to carry-on luggage. This will save you those annoying check-bagged fees and make it much easier to get around, especially if you’re using public transportation.

 

Use Public Transportation

 

Public transportation is often cheaper than renting a car or taking taxis. It’s also a great way to experience local culture. 

 

Sign Up for Travel Deals and Rewards Programs

 

If your travel plans are far enough ahead on the calendar, consider joining a loyalty or rewards travel program offered by airlines, hotels, and credit cards to accumulate points towards free air, car rental, and hotel accommodations. Some hotel credit cards offer free hotel night certificates. Plus, some cards offer additional benefits and perks, such as upgrades to elite status. 

 

Look for Bundled Deals

 

Some online booking websites offer bundled travel deals that can save you money by booking your flight, hotel, and car rental together. Shop and compare a few booking websites to see who offers the best deal. 

 

Happy Traveling!

 

We all love to travel, and we all love to save money. Unfortunately, the two don’t always go hand in hand. By incorporating these money-saving tips into your vacation planning, you can enjoy a memorable and budget-friendly trip without compromising the overall experience.

 

Happy traveling!

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

5 Tips to Stay Calm During a Market Downturn

5 Tips to Stay Calm During a Market Downturn

by | Oct 11, 2022 | Economic News, Financial Advice, Financial Planning, Investment Management, Uncategorized

Is the economy slowing down? How will rising interest rates impact my finances? Is a recession around the corner? Scroll through any newsfeed and you’ll hear these unsettling questions. And while the headlines can be alarming, we remind our clients of the benefits of staying calm, cool, and collected—keeping their eyes off the headlines and focused on the end goals we have set up for them. 

 

Stay Invested

 

Some of the costliest mistakes investors make come down to one thing and one thing only…their emotions! If you have a sound investment strategy, there’s no reason to “jump ship” in a downturn. This is called panic selling. Panic-selling is when you sell your assets when values are down to try and avoid further loss, with the intention of “jumping back in” when the market has recovered. The thing is, though, that we never know when or where the bottom is, nor do we know when it will recover.

 

Remember Big Dips Can Precede Large Surges

 

And, because the market has some of its best days right after some of its worst, most investors miss out on the recovery and end up re-buying similar assets at a higher price—plus the liability on tax events they may have triggered by liquidating their assets. Just consider those who sold at the bottom of the March 2020 COVID-induced drop and missed out on the miraculous, V-shaped recovery we saw over the next two years.  If fear prompts you to sell, you could miss the upside.

 

Take Your Eyes (and Ears) Off the Market

 

Where focus goes, energy flows. The more you buy into the headlines, the more emotionally affected you may be by them. But no matter how diligently we watch the headlines, none of us can control what will happen with the stock market. So, if you feel the noise in the media tempting you to make a financial move you might regret, just tune out the noise. And of course, connect with your financial advisor to discuss your concerns. This is often all that is needed to restore a sense of peace and confidence in the financial plan.

 

Focus on What You Can Control

 

There are some aspects of our financial lives that we can control with our actions, and others we cannot. As discussed earlier, we can’t predict market volatility – and we certainly can’t control it – but we can understand that its disruptions are temporary and won’t result in permanent loss. As long as your advisor is re-balancing and speaking with you about how they are handling your portfolio during the downturn, it’s unlikely there is much needed from you—except, of course, your trust in the process, the plan, and the long-term goals your advisor set up for you.

 

Lean on the Help of Your Financial Advisor

 

Your financial advisor is here to help you with more than just investment management, tax planning, and retirement planning. We are here to help you stay even-keeled and level-headed when major and minor events threaten your cool. Of course, we update, re-balance, and diversify your portfolio ongoing to make sure you stay on track to reach your goals, but if a market downturn has you worried, we’d be happy to go over your financial plans with you at any time.

 

Remember, the market moves up and down daily. Market downturns (and upswings) are par for the investing course. We’re here to help you make the most of each situation to maximize your returns long-term.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Is the 60/40 Portfolio Allocation too Risky Now?

Is the 60/40 Portfolio Allocation too Risky Now?

by | Sep 7, 2022 | Economic News, Financial Advice, Financial Planning, Investment Management, Uncategorized

For over seven decades, the 60/40 portfolio allocation has been the stalwart strategy of retirement planners with a high degree of success until recently. More recently, the tried and true portfolio mix has come under pressure, mounting uncharacteristic losses that may indicate it has lost its luster. What has changed for the 60/40 allocation, and has it become too risky?

 

Background on the 60/40 Allocation

 

The 60/40 portfolio has been around for more than 70 years, but it was popularized by Vanguard founder and investing great John Bogle. The research and data available at the time showed it to be an optimal allocation using stocks to drive returns and bonds to provide ballast during volatile markets. It was considered a balanced portfolio that could achieve growth while minimizing volatility and downside risk. A 60/40 portfolio regularly outperformed all stock or all bond portfolios.

 

It worked because, during most of that period, stocks and bonds had a low correlation with one another. When stocks were performing well, bonds were underperforming, and vice versa. But in 2021, that equilibrium suddenly changed. In the final quarter of 2021 through the current month, stocks and bonds became highly correlated, with both performing poorly. Instead of a portfolio where bonds are tempering the slumping returns of stocks, they have now become an additional drag on it. That’s not what investors sign up for with a 60/40 portfolio allocation.

 

It’s important to understand that the 60/40 rule was established long ago under different economic and market conditions. It performed exceptionally well over the last several decades because it was a time of historic gains in the bond market. That’s because interest rates had been in a sustained decline since the 1980s. Not anymore.

 

That was Then. This is Now

 

With the recent surge in inflation, the likes we haven’t seen in more than 40 years, the conditions for bonds have changed to the detriment of 60/40. To cool inflation, interest rates must rise. When interest rates rise, bond prices fall, which they have been doing for most of this year. Interest rates will continue to climb depending on how long and high inflation will run, making it difficult for bonds to fulfill their role as a defensive hedge.

 

If you believe the experts, investors in a 60/40 portfolio should downsize their return expectations over the next decade. Vanguard forecasts a relatively low median annual return of less than 4% through 2031. That’s well below the 7% annual return target of a 60/40 portfolio, primarily due to declining bond prices. 

 

Is it Time to Consider Total Return Alternatives?

 

If high inflation persists, investors now have to worry about the possibility of negative returns on their investments. For some investors, especially those with longer time horizons, it may be time to change the allocation rule with less emphasis on bonds and more emphasis on total returns. Several bond alternatives provide diversification while enhancing total return opportunities.

 

Utility stocks: Utility stocks act similarly to bonds because they offer high yields and relative safety. Some of the better utility stocks have a record of steady earnings and dividend growth. While utility stock prices can be sensitive to rising interest rates like bonds, they offer higher total return potential. 

 

High-quality dividend-paying stocks: High-quality companies with a long history of paying annual dividends and increasing them over time are a reliable source of income. They also tend to be less volatile than the rest of the stock market, making them a great diversifier. The dividend acts as a cushion against declining share prices. 

 

Real estate investment trusts (REITs): REITs are professionally managed real estate portfolios that hold up well in an inflationary environment. Many are required to pay out up to 90 percent of their earnings as dividends, making them a reliable income source. 

 

Though it may not be entirely over for the venerable 60/40 portfolio allocation, it may be a while before it recaptures its magic, which calls for some rule adjustments in the meantime. The adjustments don’t have to be radical—perhaps moving from a 60/40 stock and bond allocation to a 60/20/20 stock, bond, utility stock, high-quality dividend stock allocation, or some combination of all the above. 

 

However, any changes to a long-term investment strategy should always be made in consultation with an investment advisor with the expertise and tools to help you assess your circumstances and create an allocation consistent with your investment objectives, time horizon, and risk profile.

 

 

 

 

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Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

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