It’s Been a Wild Year. What Have Your Advisors Done for You?

Unless you’ve been living under a rock, you’re aware that this year has been one of the most volatile in over a decade. In addition to equities having their worst start since World War II, an assumed safe haven in the form of bonds has also had its worst start ever. It’s in times like these that having a good advisor can be so integral. If your advisor isn’t doing some of the below for you, it may be time to get a second opinion.

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1.?Tax-Loss Harvesting. One of the most powerful tools a good advisor has in their toolbox is tax-loss harvesting opportunities. ?While nobody likes declining asset values, taking advantage of losses now can save you a lot of money in the future, when asset prices are on the rise again. There are a number of things your advisor should be considering for you. If you’re still in mutual funds, what do capital gain distributions look like so far (some funds paid out a mid-year distribution)? They should also keep an eye on end-of-year estimates. By tax-loss harvesting now, your advisor might have the ability to offset a portion or all of your capital gain distributions. For many of our clients, we have banked losses they can use in perpetuity against future capital gains and/or $3,000 in income each year. The losses don’t expire.

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Tax-loss harvesting does not mean you’re out of the market (unless you want to be). Positions that are sold to capture the losses are placed in a proxy fund during the 31-day wash sale period.

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2.?Revisiting Your Plan. The first thing we do for all our clients is discuss their planning needs. Before investments are ever talked about, we showcase why we plan the way we do and include data on some of the worst times in history to show how our planning is coordinate to withstand volatile times. While it’s uncomfortable seeing asset levels go down, a good plan should always be revisited and reiterated every year and especially during market pullbacks.

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3.?Sending Good Content. If your advisor isn’t absorbing as much content as possible and passing on the pieces that are relatable to you, then they’re doing you a disservice. While each client’s knowledge of the markets and investments differs, there are a variety of pieces we personally have at our disposal to pass along to clients, whether it’s more technical information on how the analysts view the markets now and into the future, or whether it’s concerning behavioral finance, such as pieces by our friend Mike Antonelli of The Bull & Baird. in which he stressed the importance of staying the course.

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4. Calling You During Volatile Times. A lot of advisors shy away from reaching out to clients during periods of extreme volatility, such as what we’ve seen in 2022. Sometimes those conversations are tough, and it’s human nature to want to avoid them. However, there is a huge level of trust that can be built when your advisor is calling you to have those hard conversations. Whether it’s talking about historical market patterns or just talking you through the fear you’re probably having, those conversations can be invaluable. Revisiting your plan can bring a lot of comfort to clients, and it’s important that you feel heard.

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Nobody has a magic bullet during market downturns – especially this current one. Some investments have gotten clobbered far more than others, but that is the nature of the markets. We at Baird Retirement Management don’t have a crystal ball, but what we do have is the knowledge to call you to take advantage of market downturns, and the experience to talk you through difficult periods that we will, no doubt, face from time to time. Our goal is always to build valuable relationships with our clients for years to come. If you’d like a second opinion, we’d love to give you one.

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