Finding Results and Reassurance: The Importance of Hiring a Wealth Advisor | Debra Brede

Finding Results and Reassurance: The Importance of Hiring a Wealth Advisor

Those who know me are familiar with my bottom-line orientation. I always aim to cut to the chase and get to the heart of any issue at hand. As a wealth advisor and financial planner, my lone priority is to get you the best risk/reward ratio on your investments. That’s how I determine my success, and it’s the standard by which I expect clients to evaluate my work as well.

While it may sound simple and straightforward, there’s a lot that goes into achieving that lone priority. For one, my ability to do that is directly proportional to my knowledge of a client’s circumstances and goals. To gauge them, I ask clients to define peace of mind for themselves and their families—their “Act Two,” if you will (for insight on what this process looks like, check out my post “Retirement: Defining Peace of Mind”).

This is an important step for both of us. Without a plan in place, even if they have enough funds to make it through comfortably, people find retirement unfulfilling. Those empty hours become empty weeks, months, and years. And all that unproductive time becomes depressing. By the same token, I can’t develop a custom-tailored plan to meet a client’s interests and needs if I don’t know what they are. The bottom line? You need a purpose in retirement, and you need to share it with others.

So, how do I—or any experienced, client-focused advisor—achieve purpose-driven retirement success for my clients? In addition to creating a strategy with their unique circumstances in mind, I also help mitigate some of the issues individual investors tend to run into due to human psychology and emotion.

For so many of us, fear rules the game. As a result, investors sell when an issue is falling (fear of further losses); buy when a stock is already near its peak (fear of missing out); or fail to think about how a particular product or investment might affect their retirement strategy or portfolio before purchasing it (fear of doing nothing). But those fear-based actions are antithetical to what I’ve learned over more than three decades as an advisor: nothing is more important than creating a strategically diversified portfolio.

How do you trump those overwhelming fear-based urges? Find the right advisor. He or she will manage your wealth based on three crucial pillars: real diversity of investments, a safety net of bonds and cash, and buying on weakness and selling on cash—all in service of your ultimate goals in retirement. These efforts are tricky to carry out for the average investor, but the modus operandi for an experienced professional, making choosing the right individual an invaluable investment. How will you know that you’ve found the right financial advisor? Ask them about their experience and strategy—and ask whether they have any questions for you. If they demonstrate interest and concern for your unique circumstances, and those three pillars are part of their plan, you’ve probably found a winner.

Are You Financially Fit For Retirement? Let’s Check | Debra Brede

Are You Financially Fit For Retirement? Let’s Check.

You may be wondering if you’re financially fit for retirement, especially given the current volatility in the markets—and the world at large. But regardless of what’s happening outside your door, you can take steps to help ensure your financial future remains safe and healthy.

First off, it’s key to remember that everything is temporary, especially when it comes to the markets. And that’s actually good news as long as you remain dispassionate—avoiding a knee-jerk reaction when things seem to be taking a turn for the worse. The reality is that most stock market declines have been intra-year. That means it’s very possible to ride out even the worst-seeming situations, particularly if you keep enough bonds and cash in your portfolio. With that in mind, you can be confident that there will be sunnier skies ahead, and that, in the meantime, if you have a diversity of assets in your portfolio, you’ll be able to weather the storm.

With that said, that diversification has to be strategic. It’s not enough to simply allocate your assets into different baskets. You also have to set things up in such a way that you can withdraw the funds you’ll need to actually enjoy your retirement without depleting the investment capital that produces future growth. That’s what’s called active management, and it’s a lot of work. But it’s the best way to have a tangible impact on your investment portfolio.

Up for the challenge? If it seems overwhelming and you’re not quite sure if you can handle it, you’re not alone. And it doesn’t mean you’re out of luck. Unlike cultivating your physical fitness—which requires you to put in work day after day (even if you have a trainer, he or she can’t do those push ups and crunches for you)—you can outsource your financial fitness, leaving it to a pro. He or she can avoid the pitfalls of passion and panic alike, and keep your funds in the best possible condition, given the circumstances.

Of course, you certainly have a role to play in determining your future, and one of the most important things you can do is consider what you want life in retirement to look like. Ask yourself about how you envision every aspect of your existence in retirement: where you want to live, the passions you want to pursue, the causes to which you want to dedicate your time, and what you want your legacy to be. If you’ve determined the answers to questions like these, set goals, and started building financial plans, you’re on the right track. And if you’ve just learned that you have some work to do, that’s okay too. Make the commitment to get started now, and just take it one day at a time. After all, this is a marathon, not a sprint.

Pay It Forward! The Retirement Benefits of Philanthropy

There are many advantages to a financially secure retirement. You can do what you want, when you want: moving closer to your grandkids, visiting exotic locations you’ve only dreamed about, and more. And you can also give back, making an impact on the causes that matter most to you. Giving back creates the kind of purpose people often find themselves missing in retirement, and for many of us, that sense of purpose isn’t optional; it’s essential.

Maybe you’ve always had a purpose—something as clear and true and tangible as your own pulse thrumming beneath your fingers. Or maybe, without the things you’ve been dedicated to for so long—a job, your kids, a spouse—you need a little help finding what moves you. If so, you’re not alone. And fortunately, identifying where your passions lie is as easy as asking yourself a few simple questions: 

What breaks your heart when you see it? Is it people living on the street, orphans, starving or sick children, abused women, abandoned animals, polluted beaches? When you identify the issues that create that familiar ache in your chest, you can start to do something to address them.

 What makes you feel good? Of course, there’s more than one way to go about making a difference. What feels good to you? Do you find power in writing a big check, or would you rather spend an afternoon reading to a child, building a house for a homeless family, or enjoying a meal with an elderly neighbor? Asking this question and considering your answers can give you direction as to where to invest your time and energy. 

What would make the biggest difference? Think about how you can make an impact. What does the cause, organization, or individual you’re looking to help actually need? Is it money for new equipment to outfit a health clinic, individuals to help tutor children in an afterschool program, or perhaps your expertise—entrepreneurial insights or accounting knowledge, for example, that can help an organization meet operational goals or better fulfill its own purpose? With this in mind, consider how you can provide support in a manner that will be satisfying to you, and useful for them. When it comes to service, that’s the sweet spot. 

Set some time aside to really think about these questions. Once you do, you’ll be well on your way to homing in on your purpose and making the world a better place, which is a priceless gift for everyone involved. For more on achieving a purpose-driven retirement, click here and check out my book, You’re Retired… Now What?

Debra Brede

Hard Work Pays Off: My Story of Personal Growth

If you’ve been reading my blog for a while, you probably know a bit about my career and my commitment to helping my clients meet their goals and live purpose-driven lives. But it is impossible to fully appreciate the seriousness with which I approach the work I do—the degree to which I hold myself accountable for helping my clients succeed—without first understanding how I grew up.

Everyone starts somewhere, and I certainly wasn’t born knowing how to navigate the financial landscape. Quite the opposite, in fact. 

My parents were just teenagers when I was born. There were four of us by the time my mother was twenty-three. And, as you might imagine, that put a lot of strain on my parents’ relationship. Most of my memories from growing up are of my parents fighting—always about money, because they had none. 

When my dad left my mom for another woman, it was up to us to help pay the bills. My mom signed my older brother Bruce and I up for paper routes, since we were too young to get them on our own. I was five and he was six. Then, she signed us up for second routes. For years, the money we made delivering the paper was our family’s sole income, bolstered by the other odd jobs I did for my customers—like taking their trash cans to the curb and shoveling their snowy sidewalks.

My money lessons began back then, when I was five and responsible for covering the cost of the newspapers if my customers didn’t pay. I’d leave them handwritten notes when they didn’t answer the door, and after three notes, I’d cut them off. While they’d complain about me to the newspaper office, I had already learned that I couldn’t afford to give them something for nothing.

Eventually my mother applied for food stamps, but she was too embarrassed to use them herself, so she sent me in her stead. Bruce and I were the family cooks, and we’d put together a grocery list. I’d then have to take the bus to the store, pick out the groceries, calculate how much I’d be spending (all I had was food stamps; so I definitely couldn’t go over that amount), and check out in the time it took for the bus to complete it’s route and circle back to the grocery store. 

In my childhood mind, “if we only had money,” became a common refrain. Back then, I dreamed of a different reality—and I certainly wouldn’t wish what I experienced on anyone—but it also made me who I am today: resolute, driven, entrepreneurial.

My early experiences continue to fuel my life’s work. I don’t want anyone who reaches retirement to wonder what could have been if only they had money. I do everything I can to keep my clients from knowing the struggles I did, and encourage proper estate planning so that they can protect those they love too. For more information, visit debrabrede.com.

Closing laptop without passion

The Power of Dispassion

Passion. We almost always see it in a positive light. It’s an admirable trait, the driving force that brings us closer to our hopes and dreams, something that compels us—romantically or otherwise. But when it comes to investing, there’s real power in being dispassionate. However, it’s much easier said than done.

Just like the general news media, purveyors of financial information are trading on passion. Journalists know that people are more likely to listen, watch, or read (a real challenge in a world plagued by seven-second attention spans) when there’s something at stake—especially if that something is their money. The axiom holds true: if it bleeds, it leads.

Think about it. Are you more likely to buy a newspaper with a headline that reads, “Everything’s fine” or one screaming “THE END IS NEAR!!”?

Ultimately, though—at least as far as financial reporting goes—99 times out of 100 everything is fine. And even when it’s not, it’s rarely as bad as what the media leads the public to believe. And therein lies the problem: for investors, that media-generated passion often leads to panic.

So, what does the average investor do? They ignore every financial rule in the book including buy low, sell high and that which goes down comes back up. Rather than holding out when things get a bit hairy and prices start to drop, the panicked investor scrambles to get out with the rest of the crowd.

It’s one thing if they’re still working. In that case, they can eventually refuel with funds from future paychecks. Retirees end up facing a much darker scenario. When they make passion-driven plays, there’s a lot more risk involved; they can’t just put back what they’ve let go. But it’s the logistics of their current situation that often creates the issue: the combination of too much time and money on one’s hands quickly leads to less of both. 

So, how do you make it through with your sanity—and your savings—intact? The secret is to actually be a little less passionate in your approach— dispassionate, even. How do you do that? There are a few options. The first is to simply turn off your TV, get offline, or use that newspaper as lining for your birdcage. The second is to become familiar with market cycles, which serve as far more logical—and less fear-driven—indicators of where we are and where the market is heading (for a quick overview, click here). And the third is to get someone to do it for you—a bonafide professional with years of experience navigating ups and downs, someone who can be the voice of reason regardless of what the talking heads are saying. While these options certainly provide less of a thrill than today’s twenty-four hour news cycle, I can promise you that all of them are better than falling prey to it.

Couple enjoying retirement after hitting financial goals

Making the Most of the New Year: Hit Your Financial Goals and Get Closer to a Stress-Free Retirement in 2020

Close your eyes for a moment and imagine your ideal retirement. What does it look like? Are you living in a new home right next to the beach, spending summers with your grandchildren, or putting in hours at a local charity that you care deeply about? Thinking about what you’d like your future to look like is an important step in building the retirement you want, but the next one is even more crucial: you have to set goals to get there. 

Perhaps achieving the retirement of your dreams will take more saving and less spending, or shifting your allocations so that your money can grow more now, while you’re young, to allow enough funds to build up over time. Making changes to accomplish what you set out to do can be challenging, particularly if it requires a significant shift in your lifestyle or mindset. But the New Year is right around the corner, and with it comes a fresh opportunity to make strides toward your goals. With a little strategy and discipline, you can make 2020 your most productive year yet. 

We’ve covered a crucial aspect of establishing financial security time and again on this blog: finding a wealth manager who will familiarize themselves with your circumstances and aspirations, and help you make a plan to reach them. It may seem redundant, but I cannot stress how essential having a clear picture—a map of sorts—of where you’re heading is to actually making it to that destination, as well as a competent guide, of course.

Once you’ve found a wealth manager or financial advisor who knows what you want and has established a path to get you there, it is imperative to listen to him or her and stay the course. The market may do things that make you want to go all in or head for the hills, but if you’re working with a qualified professional, he or she has put a lot of thought into your strategy and there is a method to what may seem like madness. Often, the madness is actually demonstrated by investors themselves, who let fear, rather than logic and experience, drive their behavior. You’ve chosen to work with your wealth manager for a reason, so trust them. When you follow their instructions about saving and spending, and let them manage your account in the way they see fit (which is exactly what you’re paying them to do), you’ll find yourself on the road to meeting those goals—and maintaining something incredibly important along the way: peace of mind.

Are You Financially Prepared for a Relaxing Retirement?

If you’re still managing the daily grind, you may be dreaming of the day when your retirement rolls around. “When I retire, I’ll finally be able to relax,” you may be telling yourself, imagining that without a job to report to, relaxation will simply become your default mode—much the way stress is today. I hate to burst your bubble, but that’s not quite how it works.

The truth is, it’s not the ample time available in retirement that cultivates relaxation, it’s the preparation you do in advance. After all, if you find yourself without an income and more expenses than you had originally accounted for, your days certainly won’t be worry-free—no matter how many unscheduled hours you have on your hands. You also won’t necessarily be able to afford the luxuries that make retirement a walk in the park: golf, trips to see family and friends or to explore exotic locales, yoga and exercise classes, and more—you may be limited to the walk itself. 

Still, time after time, I see people bring a totally different mindset to saving for retirement than they do to living in retirement. While they can barely be bothered to come in for an annual review of their portfolio when they’re still working, after retirement they watch their account like a hawk, panicking with every market fluctuation.

But if they’ve been working with me for a while, we’ve been preparing for the inevitable ebb and flow of the markets—ones they have undoubtedly experienced over the years. They can breathe easier, because we’ve created enough of a cushion to allow them to actually enjoy their retirement, regardless of what the markets are doing.

However, their anxiety is only natural. Moving from work to retirement is a monumental shift. They’re transitioning from working to live, to living off a lifetime of work—all on a dime (though hopefully not literally), and it’s only logical to be concerned about whether they’ve done enough in advance.

But you can certainly assuage some of that fear and up the chances that retirement will indeed be as relaxing as you imagine. The way to do that is to put in the effort now, well before your last day on the job. And luckily, you can start making progress toward a less stressful future with two easy, but crucial, steps:

  1. find and work with an advisor your trust who upholds the fiduciary standard, and
  1. help that person understand what relaxation looks like to you, so that they can help you get there

It sounds simple, but it will make a tremendous difference in your future—and how you feel about it. For more insight on finding an advisor who can help you meet your financial goals, visit debrabrede.com.

Financial Management and the Holidays: How to Win the Fourth Quarter

You’ve likely worked hard all year long to save and spend responsibly. But with the holidays right around the corner, you may notice that it’s not only the temperatures that are dipping—it’s also your bank account. Chances are, your heating bills aren’t solely to blame for those dwindling dollars. With so many opportunities to get into the spirit and celebrate, it’s not unusual to find oneself indulging—and expending—a bit too much. If that’s the case for you, you’re not alone. According to a recent Gallup poll, 33 percent of Americans expect to spend at least $1,000 on gifts—and those numbers continue to climb, with last year’s holiday spending projections exceeding every year prior. But just because the rest of the country is upping the ante on the most expensive time of the year doesn’t mean you have to.

In fact, to keep your household balance sheet in check, it’s essential to be conscientious about the last—but certainly not least important—quarter. But you don’t have to be a scrooge about it. There are plenty of ways to celebrate and enjoy without going wild. And when all is said and done, your wallet will thank you. Here are a handful of tips to come out of the fourth quarter on top:

  1. Prioritize: What do you find most meaningful about the holidays? Beautiful meals? Time with family and friends? A big-ticket gift that will bring you joy all year round? When you identify what’s important to you, you can allocate your resources accordingly.
  2. Set a budget: Determining how much you can afford to spend is always a good idea, no matter how much cash you’re working with. With a dollar amount in mind, you can avoid excessive purchasing and ultimately sail into January feeling gratified rather than guilty.
  3. Make a list and check it twice: With advertising reaching a fever pitch as the holidays near, it’s a good idea to settle on whom you’ll be buying for and what you plan to get them. Having gifts—and corresponding prices—in mind can help prevent impulse buys and last minute dashes to the store (or a certain buy-with-one-click online retailer).
  4. Treat yourself: Avoid feeling depleted financially or otherwise by doing your best to take care of yourself. Walks around the block, an hour alone with a book, and even a haircut are all free or low-cost ways to keep your sanity during an otherwise stressful time.

With a little bit of planning, you can conquer the holidays and win the fourth quarter, without losing an arm and a leg. For more information on managing your money anytime of year, visit debrabrede.com. 

Stock Market Cycles

What are Market Cycles and Why Do They Matter?

Do you like roller coasters? Whether the thought of climbing steep inclines only to plummet to new depths is thrilling or terrifying to you, I can tell you one thing: the average investor certainly doesn’t like those death-defying drops when it comes to the market. Just ask anyone who worked in the markets—or had money in them—during the global financial crisis of 2008, the tech bubble burst of 2000, or the “Black Monday” crash of 1987.

I can still hear those coaster-induced screams, not because the events themselves were particularly devastating—they weren’t (at least not for those of us who stayed in the markets and owned companies that were fundamentally sound)—but because they caused such hysteria. During those years, clients called me panicking on a daily basis. It was hard not to buy into their alarm, but I kept faith that we would ratchet our way back up.

Why? I understood market cycles. What is a market cycle, exactly? A period measured not by dates, but by market conditions. A cycle is considered complete, or “full,” when the market in question has gone from bull—a market in which prices are expected to rise—to bear, when those prices fall due to widespread investor pessimism, and back again to bull.

Although past performance is no guarantee of future results, I believe studying the history of the stock markets’ uptrends and declines can help one to better understand why staying invested for the long term can be beneficial.

Since the inception of the S&P 500 Index back in 1926, the market has gone through cycles, with average bull markets lasting 9.1 years and producing an average cumulative return of 476 percent, and bear markets averaging 1.4 years with loses totaling around 41 percent. [1] Yet with all these expansions and contractions, today we stand with a stock market valuation higher than it was when it started.

We may be on a roller coaster, but that roller coaster is on a mountain. There may be peaks and valleys along the way, but ultimately—at least to date—we’re still heading up.

Of course, successful investing requires an awareness of those peaks and valleys and careful analysis of opportunities. That is exactly what I do—and have done—every day of my working life, since 1985.

 


[1] Source: First Trust Advisors L.P, Morningstar. Returns from 1926-6/29/18. The S&P 500 index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. These returns were the result of certain market factors and events, which may not be repeated in the future. Past performance is no guarantee of future results.

Case Studies in Portfolio Management

My approach to wealth management rests on something called strategic diversification. I know—we hear “diversify!” all the time. But what does that really mean? In my experience, it means a lot more than what many of my new clients have done up to the point of our first meeting. That matters because, done properly, strategic diversification has the potential to grow wealth not just as retirement nears, but throughout retirement.

The strategy hinges on active management of a portfolio’s investment allocation. If that sounds like a lot of work, it is. But I love doing it; it keeps me at the top of my game, and assures that I’m constantly fine-tuning my approach to helping clients pursue their dreams. At the core of strategic diversification is one question, which I ask of every client: “What can I do to give you confidence?”

Some want an annual phone call assuring them they are on track. Others take it (much) further. One guy said, “If you think I’m spending too much and at risk of running out of money, call me, AND follow up with a letter, in big red type, that says ‘DO NOT SPEND ONE DIME OVER THIS AMOUNT!’” And I’m fine with that. Sometimes the biggest threat to our wealth is us!

I’ve also had clients that I’ve spent a lot of time educating on the markets’ cycles, explaining that big single-day or multi-day losses are nothing to worry about, and the reasons why. I’ve built them a beautifully balanced portfolio, one I was confident would meet their retirement goals—only to have it decimated when they called my office and demanded I sell their holdings. Why? Because the financial news channels were having a doom-and-gloom field day over the latest downturn in the stock market. Which is just silly.

“Invest for the long haul,” like “diversify!,” is a mantra we hear all the time. Strategic diversification makes the daily swings of the market non-issues. It places your capital in positions that enable you to buy on weakness and sell on strength—not only while you’re still earning, but in retirement, too. I can always tell when a client really “gets” this: he no longer calls when one of his holdings drops.

Now understand, there’s nothing wrong with watching the markets, just like there’s nothing wrong with watching a football game. The risk is in reacting to them, and it makes no difference whether the news on Wall Street is “good” or “bad.” Either way, many individual investors tend to sell when their stocks are dropping or buy when they’re on the rise: the opposite, in either case, of what they should do. But strategic diversification—coupled with active portfolio management, enacted by a trusted advisor who works in your best interest—can leverage market cycles to your benefit. It can be a great way to protect and grow wealth.