7 Ways to Help Clients Manage Market Turmoil: Buckingham Wealth

Slideshow May 11, 2022 at 11:08 AM Share & Print

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Today’s volatile markets have left many investors scared and wondering what to do next. Leaders at Buckingham Wealth Partners, fielding questions on a webinar Tuesday, offered several pieces of advice, from broad words of wisdom to specific tips that may work for clients’ portfolios.

In the gallery above are a few of their ideas.

Dinah Wisenberg Brin

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1. Remember the big picture.

Jeff Levine, chief planning officer, recommended investors “control the controllables” and remember that market turmoil may seem less worrisome months from now. “Zoom out on your life, zoom out on your portfolio, look at the bigger picture,” he said. “Things always seem more difficult, more challenging, more dire when you are in that moment.”

Levine reminded investors that markets have performed well over time, and encouraged them to focus on doing “the next best thing.”

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2. Consider tax loss harvesting and Roth conversions.

Look for the silver linings. “When we’re in a period of uncertainty like this and markets are down, there are opportunities as well,” said Susan Strasbaugh, Buckingham wealth advisor. It may be a good time to harvest tax losses, using investments that have lost value to offset taxes on gains elsewhere, for example. This strategy allows investors to let the government participate in the loss, she noted.

Investors also might talk to their financial advisors about converting retirement accounts to Roth IRAs to take advantage of lower market prices and let their investments appreciate tax-free, she added.

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3. Diversify portfolios.

Diversifying client portfolios — looking at different asset types, market cap sizes and regions — is important in a rocky market. “When things are as unpredictable as they are now … your best move is to diversify your investments across as many sources of risk and return as you can,” Kevin Grogan, managing director of investment strategy, said.

Buckingham, for example, has long believed in having an internationally diversified portfolio, he noted. While there’s significant risk in overseas stocks, given the war in Ukraine and COVID, the market has accounted for that to some degree, Grogan said, citing lower price-to-earnings ratios for global stocks compared with U.S. equities.

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4. Consider I bonds.

Series I Saving Bonds, issued by the U.S. Treasury Department, earn both fixed and inflation-adjusted interest, Strasbaugh noted. The bond’s inflation rate is set twice a year. As of May, I bonds are paying more than 9.5%, “an amazing return for a very safe investment,” she said. Individuals can buy up to $10,000 in I bonds per year. The bonds earn interest for 30 years and must be held at least one year; investors lose the previous three month’s interest if they redeem them before five years.

While Buckingham planners have recommended I bonds to many clients — a couple can invest $20,000 a year — buyers purchase them directly through TreasuryDirect.gov, not through financial advisors.

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5. Take Care With Social Security

Clients who might be considering taking Social Security before age 70 because of the rocky market should talk to their advisors and consider their specific circumstances before making any moves, the Buckingham team said.

They noted that Social Security is an excellent fixed income stream, with potential payments increasing every year that a retiree waits to take it, until age 70. (They also noted that the government allows a one-time “do over” for those who take Social Security and change their minds within a year, although individuals doing this must repay any amounts paid.)

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6. Consider crypto opportunities, but use caution.

While Buckingham considers it early days for cryptocurrency investing, Levine acknowledged that it might have a place for individuals with a passion for it and outside funds they can afford to use for speculation.

Levine noted that crypto investors could potentially take advantage of market volatility and capture a loss by selling in the morning and buying back in the afternoon. He said the “wash sale rule,” which prevents investors from selling securities for a tax loss and repurchasing them within 30 days, doesn’t apply to cryptocurrencies.

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7. Don’t let clients act on fear.

Investors shouldn’t let fears over market volatility rule their decisions, the Buckingham team advised, fielding a question about whether those nearing retirement should steer clear of the stock market.

“You’re not going to retire today and cash out and spend all that money tomorrow,” said Strasbaugh. Retirees need their funds for decades more, she added. “It’s really important to acknowledge that feeling of fear but not act on it,” she said.

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