What You Need to Know
- Market volatility, inflation and health care are among the top concerns for clients of RIA RegentAtlantic.
- But clients seem to be prepared for a potential recession and have become much more resilient.
- The cost of health care, the one expense that keeps rising throughout retirement, is especially worrisome.
Clients continue to have concerns as high inflation and market volatility persist, according to Melissa Weisz, a wealth advisor at RegentAtlantic, an RIA based in Morristown, New Jersey, which also has an office in New York and manages $5 billion in client assets.
“Clients certainly have been worried about volatility,” she told ThinkAdvisor in a phone interview.
“They’re looking to be defensive. And I think if you look at last year, even early this year, the focus was really on how do we hedge inflation risk. And so that was leaning towards cheaper valuations — energy, for example, industrials.”
High inflation and how to “insulate a portfolio” from recession risk are pressing concerns, she noted. “That’s where I think valuations have started to matter where they didn’t matter for so long with sort of the crazy pricing we were seeing, particularly in software and tech.”
Now, she focuses on a value orientation for clients and “layering in more of a quality screen,” she said.
“So it’s looking at dividend payers, sustainable dividends, and I think even just telling a client, ‘Hey, you can get this sustainable dividend ETF and it’s yielding 3, 3½, 4%. That goes a long way.”
Although there is “still going to certainly be volatility, it helps keep people, I think, in their seats and it does help to provide some diversification versus maybe just a pure consumer staples play or a pure utilities play where people have really flocked to in those valuations are not terribly attractive these days,” she explained.
What it comes down to is “trying to provide sort of the peace of mind within the portfolio so that people can maintain that long-term plan,” she added.
Rising Interest Rates
Entering 2022, the Federal Reserve “really telegraphed that they were going to be raising rates,” Weisz pointed out.
“We thought it was going to be more of a gradual taper, a gradual increase” by the Fed, she said. Instead, “it turned out to be this really sort of aggressive rate increase that we’ve had.”
The firm has been educating clients on bonds, she said.