HighTower Podcast: Collective Wisdom

Cory Bittner, chief operating officer at Falcon Wealth Advisors in Mission Woods, Kansas, says that while investors may read and hear annual forecasts that they want to take to heart, they shouldn't do too much to take those predictions into their portfolio. Forecasts help advisors and customers frame discussions about a portfolio and expectations, Bittner said, but if a client is so dedicated to an outside outlook that they're forcing big changes to previous investment decisions or going against the financial planner's core reasoning, they're exposing weakness in the advisory relationship.

Given increased tensions between the United States and Iran and other current events, this week's episode revisits a recent chat with David Bahnsen of the Bahnsen Group, discussing the junction of politics, current events and personal finance. Bahnsen notes that investors need take a dispassionate view of how current events can and will impact the market, while also maintaining a personal balance because ignoring politics altogether while investing can be costly in its own ways

At the end of the year, we revisit the start of the year, when three veteran financial advisers -- Richard Flahive of HighTower Westchester, Laurie Kamhi of LCK Wealth and Jake Falcon of Falcon Wealth Advisors -- discussed the questions they most wanted to hear from clients and prospective clients about their finances and financial goals. Kamhi's question involved expectations that both the adviser and client have for the relationship and the year ahead, Flahive suggested discussing the fiduciary relationship and Falcon hopes clients will ask about what they and their planners can and can't control when it comes to the markets, returns and more.

Matt Harris, head of investment strategy at HighTower Wealth Management, said that both the current 'feel' of the market plus some technical signals -- where risk-on sectors are outperforming safe-harbor peers, for example -- are making it look like the market has more room to grow in 2020, though he did suggest there may be heightened volatility as a result both of election-year-politics and 'concentrated trades,' where the major market interest has been in specific areas that may now trade with more vigor and action.

Jeremiah Reithmiller of Sarian Strategic Partners and Steve Tresnan of Tresnan Ferst Wealth Advisors cite data showing that fixed income is no longer the same kind of buffer for equities in troubled times. But in this re-broadcast of a past Collective Wisdom episode, the two advisors come up with different solutions for balancing rate risk with the need to provide an equity hedge. While Reithmiller uses a traditional barbell-style strategy to give his clients balance, Tresnan looks more to private credit in order to diversify and achieve better balance.  

David Molnar of HighTower San Diego says that investors and advisory clients need to evaluate results based on progress toward goals rather than being focused primarily on investment returns. Focus solely on results, Molnar says, and you will miss out on the true planning and control benefits that come from planning, and that lead clients with advisers ultimately to have superior performance to do-it-yourself investors. 

Adam Thurgood of HighTower Las Vegas said that investors trying to match their risk tolerance to the market right now should not play defense by stretching for yield in today's low-interest-rate environment, noting that he does not suggest loading up on dividend-paying domestic stocks but instead wants to achieve greater diversification and return potential through international investments and some gold, offset by some additional cash holdings waiting for times to be pro-active in the future.

A year ago, the stock market shocked investors by cratering just after Thanksgiving, and while no one is calling for a similar event this year, Jimmy Hausberg of The Hausberg View in Beverly Hills, Calif., talks about the importance of keeping that decline in mind, investing as if the next downturn is on the way, even if the current landscape is dominated more by rumor and innuendo than by disturbing facts. Hausberg notes that reacting to headlines and news historically has been a bad way to invest, but that investors must be prepared to ride out the market swings caused by such non-events.

Jake Falcon of Falcon Wealth Advisors in Mission Woods, Kansas and the Upticks podcast discusses the effects of modern media on investors, how it often leads to ideas that disrupt a portfolio rather than enhance it. Falcon talks about the messages individual investors should be listening for -- where it feels like they are having a mini-meeting with an adviser rather than pursuing hot stock tips or the next big thing -- and how to balance the media and the message.

Andy Morse, senior partner at Morse, Towey and White Group in New York, said that investors can't believe that politics doesn't impact the market because earnings and policy are two factors that go a long way to driving the market. Morse said that interest rates have settled down -- even if future cuts and hikes are uncertain -- but that trade concerns continue to make it tough on manufacturers and farmers. While he expects trade issues to be resolved, Morse made it clear that he does not expect the economy and market to be overly robust going forward.