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Thursday, May 19, 2022

Buying into Market Dip to Rebalance Portfolios

 Wealth manager Jason Sands sought to keep clients on track for their long-term goals during the year of crisis, while also meeting short-term needs.Understanding investment goals, he said, and formulating a plan toward those goals without forgetting market disruptions is key to retaining and building wealth in the current market.“Their questions were, ‘Is everything going to be OK, and what do I recommend?” explained Sands, referring to the turmoil of March and April. “It went back to our cash flow analysis and our financial plan to see how the dip in the markets affected them and their long-term goals.”Sands’ clients have an average net worth of $5 million, with liquid assets north of $1 million. Their goals, he said, were to retain wealth to pass it on within the family by minimizing taxes and protecting what they’ve built over time. With the pandemic, Sands advised they buy equities during the market dip to rebalance their investment profile.“For most of them, it didn’t affect them at all, and we also reallocated back into the market at that time as well. If (there was) a shrinkage in the equity portion of their portfolios, we were able to buy into it and reallocate back into it, and we were able to benefit from it,” he added.Sands suggested investments in large tech and biotech companies for his clients, adding that they’ve done well in the final portion of 2020.“The stay-at-home stocks were really good,” he added, referring to companies that benefitted from stay-at-home orders from government officials. Netflix Inc., GoodRx and of course Zoom Video Communications Inc. and Amazon.com Inc. are examples of stay-at-home stocks.One client conversation that stuck with Sands provided a rare spark of altruism when many people are looking out for themselves. The client asked Sands about how he could financially help others, since he and his family were “pretty well-heeled.”The Ameriprise Financial advisor suggested his client contribute more to local charities he is already familiar with during this time.Added Sands: “He’s a high-risk person. … He has asthma and he was just more worried about people in his community. His altruistic mindset was really refreshing to me. That was a nice moment.”Future perspectiveLooking ahead, Sands thinks the S&P 500 might move a bit higher, thanks to liquidity the federal government has created, but said he “wouldn’t be surprised” if markets saw a correction in the short term.“If you’re looking out throughout the year, three years out or beyond that, and I think with all the liquidity that the Fed has created, it will continue to push up the markets,” he told the Business Journal.

With respect to changes to the wealth management industry, Sands said virtual communication is here to stay, and that long bouts of home time paved the way for more (and longer) conversations with clients about the future.“With everything slowing down, people were working from home, they were available to talk and have conversations. It just solidified what our plans were and what we were doing to help monitor their investments and their loans and their lines of credit and everything they do financially – and whatever their long-term goals are,” Sands said. “The best part of my personality is my skillset, active listening, really understanding what’s driving people and what we can do to make them feel better during a time when there’s a lot of chaos and unknowns.”Post pandemic, virtual communication will remain prevalent in corporations and finance, Sands said.

 He plans to continue down that path too, carefully selecting his in-person meetings.“I have clients all over the country and if I was going to make an annual trip to, say, the D.C. area to visit a cluster of clients I have there, I’m going to think twice about it because I can do things face-to-face via Microsoft Teams and it completely changes the cost of doing business,” Sands told the Business Journal. “I think those efficiencies will be adopted pretty readily; I don’t think they’re going away.” – Amy Stulick

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