If You Knew Then What You Know Now


If You Knew Then What You Know Now

You’ve probably heard the phrase, “Hindsight is 20/20” or, “Looking in the past is the clearest way to see the future.” While these phrases are often true, people don’t always learn from their mistakes – especially when it comes to investment decisions. 

In summer 2016, the market experienced record low Treasury yields. During that time, many clients and advisors failed to review historical trends and move assets into alternative investments.  

Looking back over the past 10 years, numerous financial and non-financial events rocked the market. Did you and your clients invest funds strategically in response to these events, or did you miss a good opportunity?

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  • The mortgage crisis of 2007 caused many investors to run from securities. But those who kept their ground are now reaping the rewards after the market reached record highs in summer 2016.  

  • In 2009, the swine flu appeared to be a catastrophic pandemic, sending many people into a financial frenzy. Yet, for those who remained invested during that time, the yield was nearly 5 percent.

  • When the United States’ credit rating was downgraded in 2011, many predicted a yield increase to reflect the rising risk associated with the downgrade. Surprisingly, the yield fell substantially. 

While you should be optimistic about yields increasing over the next three to five years, in the meantime, you must get your clients focused on how to generate income in retirement. You can’t allow the past to dictate your clients’ future. Clients are often focused on reasons not to save or invest, so it’s crucial to educate them on the proper products and asset allocation to maximize their portfolio. 

 

Winning Strategy

While clients often allow past economic conditions to dictate their current financial decisions, take the opportunity to educate them about promising investment opportunities and optimize their funds to achieve their retirement goals. 

 

About the Author

Mike McGlothlin is the Executive Vice President of Annuities at Ash Brokerage. His strength is helping advisors become more efficient and effective in their businesses. He and his team provide income-planning solutions focused on longevity and tax efficiency, and they also assist advisors with entering defined-benefit termination planning and structured settlement markets.