There is credit risk, event risk, market risk and a host of others but an old risk has resurfaced with a vengeance: the risk to an investment advisor or financial planner of losing clients.
To avoid this, many advisors moved their clients to cash. I am shocked and disappointed.
What are the financial planners doing about their own portfolios? Believe it or not, many of the same advisors/planners are buying stocks for their own personal portfolios. I discovered this through my own personal questions to my colleagues, recent articles in trade magazines and asking the speakers at several professional conventions I have attended since last October.
Several highly respected authorities in the financial planning and investment fields have moved their clients to zero (yes, zero) percent in equities. Few, if any, did so in October of 2007 when the markets saw their last high. But, more importantly, please note: only their clients, not their own personal portfolios.
These advisor's moved their clients to cash not in October of 2007, but more recently, like when the markets saw their first low reached on November 20, 2008. Of-course, since November, the markets (measured by the DOW) went up to over 9,000 when we started the year 2009.
Oh yes, the markets then quickly returned to yet another low (around 6,500) on March 7, 2009. Today (April 11, 2009), however, the DOW is over 8,000. I make no predictions on what happens next. That is not the point.
The advisors argue that they do not want to lose clients even though they admit that they will not be able to time the markets and get their clients back in at the most opportune time.
I disagree with this approach. A strategy that allows you to invest in stocks for the long-term while allowing safer investments to provide income, if even needed, avoids this "market-timing" method which has been proven not to work time and time again. In 1979, Business Week published an article "The Death of Equities". They couldn't have been more wrong.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.