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Leslie Davis is the owner of True Peace Financial Solutions in Overland Park, Kan., an affiliate of Topeka-based AE Wealth, which has more than $7 billion in assets under management. She talked about challenges in the investment market right now.
Q.After seeing this crisis move from market health to personal health, are investors somewhat more calmed now about the need not to panic over their portfolios?
A. Unfortunately, I do not believe the general public has calmed when thinking of the market and risk involved. I am seeing more and more panic each day. I specialize in principal protected investments, I am seeing an unprecedented influx of folks trying to exit their current market-based portfolios and move to safer options.
Q. Are they assuming some long-term risk to their portfolios by doing that?
A. If done properly, there are some have wonderful options to switch to, during this time of crisis, that provide great growth potential without risking principal. With a proper plan, most investors can make this switch with little to no harm to their long-term plan
Q. Can you talk about the different levels of guidance you are giving to clients based on varying time horizons?
A. Most of the time as financial advisors we don’t recommend selling when the market is low. However, we are dealing with a crisis far beyond usual. If you’ve been in the market for at least the last 5 years, you’ve most likely seen some great growth. That means it could be a great time to take those gains “off the table” and move to cash or principal protected options as the chances of continued market decline are great. It is one thing to be an investor in your 20’s looking at the market return over the long haul and deciding to stay the course. It is another to be a pre-retiree or retiree and know that it could take 5 or 10 years to make up just a few weeks of loss due to this crisis. If you count on the money in your investments to support you, now is not the time to risk it.
Q. Assuming the health crisis peaks within the projected 8-12 weeks many experts are suggesting, what re-positioning should clients be thinking about as they venture back into more aggressive investment tools?
A. I would absolutely recommend waiting on the new introduction of highly aggressive investments into your portfolio until we pass the peak of the pandemic. We are living in fear-driven times and I imagine this will continue until we see a light at the end of the tunnel, thus that leads to high volatility and wild market swings. There is nothing wrong with investing in more aggressive investments with “play money” you don’t mind losing, but it is totally different if you’re depending on your investments to support your lifestyle.
Q. As for Millennials, who have now seen TWO huge crashes in the past 11 years just at the start of their careers, what messages are you sending to keep them anchored to the tools that have traditionally generated the highest returns over a 40-year working career?
A. I believe Millennials need to take this moment to reflect and realize that they are not living in the same era that their parents and grandparents lived. With pensions being a thing of the past and an inevitable shaky future with social security, there will be substantially less support to help form a successful retirement. This means sacrificing and saving more than any generation before. This also is a great time to look at principal protected long term investments that provide great growth potential as well as guarantees towards building your own future “personal pension”. Millennials have many more investment options than previous generations
P | 913.681.2609 (O), 913.669.9095 (M) E | leslie@truepeacefinancial.com
