Are you on the right financial path?


After an 8-year bull market and new political uncertainty, should you be more concerned about volatility risk? Is it different this time and should you be more defensive with your investing? These types of questions are common at this stage of a market cycle and after most president changes, in varying degrees.

The answer is situational:

  • Yes or maybe, if you don’t have a plan. If your asset allocation is more aggressive than your goal requires, you are taking on unnecessary risk. Or, if your investment structure is inappropriate for your life stage or time frame, or if you have been focused entirely on returns without regards to risk, or if you are under-diversified, or you have too much inflation risk due to excessively avoiding market volatility, you will eventually be in for a surprise and get off-track.
  • No, if you have a well-crafted plan, you are following the plan, and your goal hasn’t changed.

If “no”, here’s why:

  • Your plan already expects uncertainty and volatility, and is designed to handle good and bad market environments over time, towards achieving the goal.
  • You already have a “defensive” strategy, by not taking excessive risk relative to your goal.
  • Inside your portfolio(a), there is a “defensive” bias by learning towards “high quality” bond and stock managers, on average, that is designed to dampen volatility relative to the broader markets.
  • Abandoning your plan due to short-term concerns is tantamount to throwing away your car and walking, after a flat tire. Concern, pauses and adjustments consistent with the plan are a normal part of all successful journeys.

Does a lack of major changes equal inaction? No, because The Advisory Group is regularly tuning behind the scenes to help keep you on track:

  • Revisiting your goals vs. your plan and investment structure, and adjusting accordingly.
  • Rebalancing portfolios to control risk, and trim-back over-valued asset classes. For example, rebalancing was done in the last 60 days for all clients that needed it.
  • Adjusting sub-asset allocations and investment managers as necessary, and increasing or adjusting diversification periodically, for improved risk management as the environment evolves.
  • Use of High Yield bond managers that don’t invest in true “junk bonds,” thereby reducing risk.

The key is to focus on what is required to meet your goals, and overcome occasional discomfort, to stay on track. The Advisory Group is available to be your guide.

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