Financial advisers are grateful this Thanksgiving for clients who have been calm and cool in the face of intense market volatility.
Financial advisers are grateful this Thanksgiving for clients who have been calm and cool in the face of intense market volatility.
Some advisers said, however, that they would appreciate an extra helping of courage for the leadership in Washington.
The dozen members of the so-called supercommittee who are trying to trim $1.5 trillion from the nation's deficit over the next decade should be bold in their proposals, said adviser Cheryl Holland of Abacus Planning Group Inc.
“I would be grateful for the supercommittee to come back to us with recommendations that would challenge everyone's thinking about sacrifice,” she said.
As they consider their blessings this year, advisers said that their clients have been patient as economic turmoil at home and overseas has roiled America's markets.
Since August, the S&P 500 plummeted 15% and then bounced back 17%. The index is just about exactly where it was a year ago.
Although market volatility makes it hard for advisers to know where to put clients' money, those clients are keeping their cool, said Stephen Aucamp, an adviser with Convergent Wealth Advisors. Clients call with questions, but for the most part, advisers report less panic, compared with previous rocky periods.
IMMUNE TO VOLATILITY
“Clients have largely become immune to the volatility,” Mr. Aucamp said. “They seem to be resigned to the idea that we're in a low-growth environment.”
Clients' confidence and trust make the advisory business fulfilling and helps advisers create financial plans that make a positive impact on clients' lives, said Mark Petersen, an adviser with Carson Wealth Management Group.
Looking forward to next year, however, he said that he would like to see more certainty in the political situations in Europe and the United States.
America's estate tax laws concern Mr. Petersen in particular because they are set to change in 2013 unless the president and Congress can agree on new terms.
The estate tax is set to rise to 55% with a $1 million exemption, from 35% with a $5 million exemption.
“That type of uncertainty makes it difficult within the financial sector to plan, because you don't know what the landscape is going to look like in 131/2 months,” Mr. Petersen said.
The uncertainty makes clients more cautious than ever about retiring, he said.
Advisers also said that they would like to see more Americans get serious about estate planning for themselves in the next year.
“About 80% of affluent Americans don't have a logical plan to distribute assets to the next generation,” said David Phillips, an adviser with Estate Planning Specialists LLC.
Even with the uncertainty, some planning should be done, he said.
The debt reduction proposal, which the supercommittee must submit to Congress Wednesday, could make the tax environment more certain, but a substantial plan could do even more, some advisers said.
“Significant commitments to debt reduction would demonstrate our leadership globally,” said Kurt Laubinger, president of Potomac Wealth Management LLC. “We'd have better standing to tell the Greeks, the Italians, the Spanish, the Irish, whoever is the debt trouble du jour, that you need to get your house in order.”
Most clients are willing to contribute to debt reduction, including paying thousands of dollars more in taxes each year, advisers said.
Another significant gripe is that too much regulation is being imposed on the financial services industry.
“We've moved beyond any financial crisis or mortgage crisis, and now we're in a regulation crisis,” said independent adviser Chad Karl.
He sits on the board of a small Wisconsin bank and said that implementing the Dodd-Frank financial reforms has required the bank to hire a new compliance officer, in addition to bringing in outside attorneys.
“And Dodd-Frank isn't even all implemented yet. It's pretty scary,” Mr. Karl said.
SOCIAL GUIDANCE
Meanwhile, Brittney Castro, a Perennial Financial Services LLC adviser who works mostly with female clients, said that she hopes next year will bring better guidance for financial professionals who use social marketing.
“It's especially important to be able to reach out to women through social media,” she said.
Women are more likely to trust an individual after they have online exposure to them, such as through an adviser's blog, Ms. Castro said.
Finally, many advisers appreciate phenomenal clients and coworkers and said that they are grateful for being part of the financial advisory business.
“Our profession is pretty blessed. We're not struggling the way some entire industries are,” Ms. Holland said.
Email Liz Skinner at lskinner@investmentnews.com
