Matt Delaney Survey in North Bay Business Journal


This survey originally appeared in the North Bay Business Journal, August 21, 2017.

1.    When it comes to managing client portfolios, what are the three to five key economic signs you watch most?

Investors try to make their investment decisions based on something they read or saw in the newspaper, on TV or on the internet. That’s all noise.  When investors start paying attention to “economic signs” such as the new U.S. President, tense relations with foreign powers, technology trends, hot stock tips, etc., mistakes are made. Do we live in volatile times? Of course. Investment worries and overconfidence are a constant. Both only harm your portfolio, long-term. We constantly remind investors: When you have the money, invest it.  When you need the money, take it out. Worry less about the noise. Start focusing on the game plan.  How much have you saved for retirement?  Can you save more?  Are you taking too much risk or not enough risk with your investments? Are you overspending each year?  Instead of focusing on economic trends, these are the questions that will help people achieve their goals long term.

We advise to stay disciplined and diversified, keep costs low and save as much as you can. Ignore the noise. The world economy has always gone through periods of growth, downturns and uncertainty, and now isn’t any different. We continually help our clients focus on what matters.

2.    What mistakes do you see individual investors making in the current financial climate?

We are seeing two extremes.  On one side, overconfidence is promoting blind optimism. On the other side, outright pessimism is driving premature exit of the markets. Neither helps you in the long haul. Emotional decisions have no place in investing, yet emotional decisions are made all the time. To avoid emotion-driven investing, a written investment policy statement (IPS) should be in place. The IPS should be a roadmap of where the investor is headed, always there to reference. Too many investors skate to where the puck was, instead of skating to where puck is going. When one asset class has big gains at year-end, many investors see it as an opportunity to jump into that asset class. Unfortunately, good returns in one asset class at year-end don’t guarantee good returns for the following year. When investors make these reactionary decisions, they are, in essence, buying high and selling low. While everyone agrees that they want to buy low and sell high, emotional reactions often enter into the investing process without an investor recognizing it.

3.    What trends are you anticipating will most impact investors over the next year?

The biggest change is within the retirement plan space. In the past, if advisors recommended a mutual fund that had a higher expense ratio, they could get paid more without disclosing this to their clients. While our firm has always taken on a fiduciary role to our clients, this has not always been the industry standard. The Department of Labor’s recent changes to retirement plan management, now require advisors to take on a fiduciary role to their clients. This is a great thing for investors and is something that should have been required decades ago. The new changes allow retirement plan participants to be more confident in fee transparency. They aren’t being encouraged to invest in one thing over the other to line their advisor’s pockets. If only all advisors would take on the fiduciary role to their individual clients and not just retirement plan clients. Hopefully this next step will be seen in the next few decades.

4.    Is there anything you would like to add?

While hope springs eternal, the data overwhelmingly shows that individual investors make less than stellar decisions. Greed and fear take turns rearing their ugly heads, and investors end up buying high and selling low. The average investor barely keeps up with annual inflation. It is time for investors to learn how to become more successful long-term.  A successful retirement isn’t built by focusing on market timing, trends, and other distractions. Keep spending down, put more money into 401(k) and IRA accounts, diversify, ignore the noise, and don’t lose focus on the end goal: providing for a secure retirement.