Advisors’ 5 Seasonal Investing Tips for Clients

Advisors say the biggest mistake people make is not planning their spending for summer, and even Christmas, early in the year

Like the seasons in the year, investors often follow a cycle that changes with the weather. Knowing about the cycle and how it affects finances can help advisors and investors.

“Clients have three seasons: spring, summer and fall,” says Andy Rice, vice president of Money Management Services, an independent RIA firm in Birmingham, Ala.

The seasons, Rice says, move to different rhythms. “Spring is all about taxes. Summer is time for vacation and to relax. Fall is the time to get everything done; the kids go back to school, and of course, Christmas is coming,” he says.

While summer has its own set of traps for investors, all the seasons have distractions, a fact that Diane Winland, a CFP, CPA and resident financial planner at Financial Finesse, underscores. “There’s a fall hangover,” she says, when the credit card bills from spending on summer vacations and back-to-school clothes and supplies come due. “Then there’s a Christmas hangover in January” when the presents have to be paid for.

Both Rice and Winland say the problems all come down to the same thing.

“It all gets back to setting goals,” Winland says. “What do I need to reach these goals? You probably need to save money.”

Planning, for vacations, the purchase of a summer home, and even Christmas presents, must start at the beginning of the year.

“Clients have so much focus on their daily lives,” Rice says. “The biggest mistake is not budgeting for big ticket items throughout the year.”

Satellite image of a hurricane. (Photo: AP)1) Preparing for Storm Season

Most people’s biggest investment is their home. If they have a vacation home, that ups the ante. And it’s likely a vacation home is an area that is subject to hurricanes and other storms that strike coastal areas. It’s important that clients consider the cost of getting a home storm-proofed when they decide to buy a vacation home and when they make a yearly budget.

2) Summertime and the Living Is Easy—If You Save for It

Summertime means relaxing, but kicking back often comes at a price. The days of the “staycation” seem to be just a memory. Winland says people these days think, “been there, done that. We need to go somewhere.” Vacations and summer homes can be costly. Paying for them can blow a hole in any savings plan. That’s why it’s important to plan ahead and look for bargains. Using frequent flyer miles to get to your vacation destination can help ease the cost and leave some money for having fun once you arrive.

One way not to fund your summer vacation: a 401(k) loan. Data from Charles Schwab show requests for 401(k) loans jump about 16% on average during the June through August period.

"Borrowing from a 401(k) plan may seem like a quick cash fix—but it’s almost never a good idea," the bank said in a statement, citing factors including the opportunity costs of not contributing to your plan while repaying the loan and the risk of losing or leaving your job—and seeing the entire balance come due in as little as 30 days.

tax clock

3) Taxes, Taxes, Taxes, Taxes

As noted above, the focus for spring is on taxes. But your clients need to keep their eye on those quarterly payments. It’s easy to forget about them as they head off to relax on some island or take the kids far from the routines of daily life.

4) Jingle Bells, Jingle Bells—in January?

Christmas might seem far away at the start of the year, but that’s the time to start planning. Make a list (of who you want to give gifts to and how much you want to spend) and, like Santa, check it twice. Make sure your spending desires fit the size of your budget; that way you won’t be left scrambling to pay off the bills as a new year dawns.

5) Keep Your Eye on the Portfolio

Traditional wisdom might say the markets go into summer doldrums, but that’s no reason not to stay on top of investments. This year, Winland says, everyone is watching the election cycle and waiting to see if Congress will do anything on the tax front. Rice says it’s important for families “to consider hiring a CEO or CFO for their household” in the guise of a financial advisor.

That can take some of the burden off the client. Of course, the client still needs to check in to see how things are going.

Mike Patton, president of Integrity Wealth Management, says vacation doesn’t stop him from protecting his clients: “When I go on vacation, I take my laptop with me.”

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