Banking & Finance

Local Advisers Share New Year Tips

By Jenny Callison, posted Jan 8, 2021
With the market tumult of 2020 behind us, financial ad­visers are ready to help their clients navigate the possible challenges and opportunities of the new year. Here’s what is top of mind for five local advisers.
Steve Coggins, CIO of Irongate Partners:
“I will spare you the recap, but needless to say 2020 will take several pages in the history books rather than a paragraph or two! So, what now? While no one knows, here are some things to con­sider. From an eco­nomic perspective, a recovery is happen­ing though millions of people are still unemployed and millions more stay­ing home. The Fed has committed to keep short-term rates low for the foreseeable future. Despite a massive rebound in the stock market after a violent early year sell-off, those two things (a recovery/economic growth and loose financial conditions) often make for a continued march higher for stocks. That said, fundamental valuations are near record levels, and long-term rates may be headed high­er. That doesn’t mean a bear market is coming, but it does mean that stocks and bonds face headwinds, so caution is warranted.
“Serving as our clients’ personal CFO, we believe it’s a good time to review one’s risk appetite. There were two major tax law changes last year that had a significant impact on es­tate and retirement income planning, so going into this new year, it’s also an excellent time to review all aspects of your financial plan.”
Pat Kusek, President and Founder of Kusek Financial Group:
“There is no doubt that 2020 was a challenging year, not only in terms of the economy and finances, but in health and safety concerns as well. Obstacles are always present in planning for the future, but the fundamentals stay the same. Ev­eryone needs to have a plan, com­mit to that plan, make adjustments when necessary and stay the course through good and bad markets. For most people, having a plan includes working with a financial adviser to set goals, evaluate risk tolerance and identify areas of special concern, and to serve as the calming voice when the going gets tough.
“We are bombarded hourly with news from thousands of sources, encouraging us to do something immediately. I encourage my cli­ents to remain calm, remembering why we are invested in the way we are, and that this storm, too, shall pass. Markets go up, and markets go down. Investing in good-quality, sound companies that provide goods and services that people need in good economies and bad can provide growth and dividends for every inves­tor. It just takes patience and sticking to your plan.”
Robert P. Loweth, CFP with Rexroad Loweth Wealth Management:
“My major piece of advice for 2021 is to make sure you have adequate cash on hand. I think the stock market is expensive, any way you look at it. The price/earnings (P/E) ratio mea­sures the relative expensiveness of a particular security. As of the end of 2020, the P/E ratio for the S&P 500 stood at 22 – nearly as high as during the tech bubble, which burst in March 2000.
“For the P/E ratio to normalize – i.e., get back to its 25-year average – the S&P would need to fall 30% or earnings would need to increase by 30% over the current forecast.
“Despite this, I think the stock market still has some upside to it. If the vaccine rollout is successful, I expect the stock market will pop. If COVID is successfully defeated, I expect another pop as pent-up con­sumer demand is unleashed. Howev­er, if either of these do not occur or are not as successful as anticipated, I see enthusiasm for the stock market waning and with it, a market down­turn.
“Assuming proper allocation of your investment accounts, you should hold onto cash so that you do not raid the piggy bank when the market is down. If the stock market tanks, this might be a great opportu­nity to convert part of your IRA to a Roth IRA. Although the conversion results in immediate taxation, all future growth is tax free.”
Kelly Luckhaus, Financial Adviser with Edward Jones:
“As 2020 finally becomes part of the past, I continue to talk with clients about how it has impacted them and their families. Everyone’s situation is different: some clients were fortunate enough to simply shift their travel budget to home improve­ments; others made unplanned financial contributions to families and com­munities. We have clients that will need to rebuild their emergency funds; others that have finally realized the importance of updating their will.
“As always, a new year brings the opportunity to update goals, budgets and financial plans. We continue to talk to clients about their comfort with risk and how that may have changed. Discussions include the benefits of rebalancing portfolios and updating budgets. It’s a good time of year to increase savings for retirement or other goals.”
Christopher Riley, Wealth Management Adviser, Captrust:
“Throughout the volatility of 2020, at CAPTRUST we have ad­vised our clients to stay committed to their financial plans. As we move to­wards 2021, there are several changes that may have a positive impact on the market.
“First, we expect efforts to enact a vigorous job-creation program focused across manufacturing, infra­structure and other sectors. Addi­tionally, continued support from the Federal Reserve and the potential for a targeted stimulus from Congress that may help citizens and businesses as they recuperate from the impacts of COVID-19. We anticipate seeing a slow build toward a vaccine-supported recovery for businesses that will continue over the course of the year.
“When it comes to taxes, it is possible that we will see some adjust­ments in 2021, but big changes are not likely."
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