5 key reminders for clients

“October…” American humourist Mark Twain wrote. “…This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

Indeed, the world of investing can be intimidating. But clients who opt for a thoughtful, steady approach will be best-positioned for long-term success. This month’s Global View offers a few key reminders for advisors and their clients:

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• Don’t underestimate the importance of handholding. At least for some clients, advisors’ real value lies in their ability to guide clients through a holistic plan and help them avoid irrational (and often emotional) pitfalls, according to this Forbes article by Andrew Stafford.And that value doesn’t end upon retirement. A Money story by Dan Kadlec discusses how the natural caution that comes with aging can affect investment returns.

• Taxes have the biggest impact after your clients retire. This Waterloo Region Record article by Canadian Press (CP) reporter David Hodges makes the case that clients are most vulnerable to the ravages of high taxes when they begin drawing down on their nest eggs in retirement. They should look at the big picture in order to fork over less cash to the government and avoid a clawback of government benefits.

• It may pay to stray (far from the madding crowd). In the past five years, money has been flowing out of actively managed mutual funds into passively managed exchange-traded funds (ETFs). But this article by MarketWatch columnist Michael Brush discusses a contrarian investment strategy. The upshot: the inflow of cash to ETFs artificially inflates the performance of those stocks relative to the non-index value stocks. His message: Investors should shop for value among the stocks that are cheaper because they are “left behind.”

• Female clients should have faith in their own investing abilities. This com article by the Associated Press’ Stan Choe points out that, when it comes to investing, both men and women mistakenly believe men are better investors. Such attitudes may discourage some women from taking charge of their future.

• Debt and retirement don’t make good bedfellows. According to a report by Equifax, debt (excluding mortgages) held by those over 65 averaged $15,244 in the fourth quarter of last year – the highest percentage growth of any demographic group. This News 1130 story, penned by Craig Wong of CP, looks at the trend and alternative solutions to borrowing.