How to Manage a Wealth Portfolio Through Market Cycles

When you can monitor the stock market and your own wealth portfolio 24/7, keeping a big-picture perspective can be tough. Watching as markets rise or fall can make investors anxious to act. Either to capitalize on a lucrative opportunity, or to get out of failing investments before things get worse. Navigating market cycles is a given when it comes to investing, but knowing that may not make you feel less stress when an economic downswing impacts your wealth portfolio.

When you work with wealth management advisors, you don’t have to make decisions on your own when it comes to adjusting your portfolio in response to market cycles. Your advisors will do this for you, and you can always ask questions about the process. Many people are interested in how their advisors navigate their portfolios through changing economic conditions.

HOW WEALTH MANAGERS NAVIGATE WEALTH PORTFOLIO THROUGH MARKET CYCLES

• Market Monitoring and Analysis.

Analyzing market activity is a core part of what wealth managers do. This includes a range of activities, such as monitoring current market activity, studying data, consulting financial models, and studying the geopolitical landscape to anticipate future market trends. Because market cycles are such a routine part of our economy, advisors glean a lot of insight from historical data. 

Essentially, wealth managers look at all available information that could impact the performance of their clients’ wealth portfolios. Market monitoring is an ongoing part of wealth management, so advisors regularly review this data. Knowing where we are in a current market cycle is an important part of making the best strategic decisions for clients’ wealth portfolios.

• Diversifying and Portfolio Rebalancing.

This is where wealth managers act on insights from their market analysis. While emotions might influence individual investors (confidence or fear), wealth managers can make rational, data-driven adjustments to a client’s portfolio. Sometimes, that means holding steady until market conditions change. At other times, wealth managers will rebalance clients’ portfolios over the course of a typical year. That can include selling underperforming stocks when the market is in a downturn, diversifying into new asset classes, adjusting the ratio of stocks to bonds, buying new stocks when the market is rebounding, and more strategic asset allocation.

• Optimizing Tax Strategy.

Even small adjustments to your wealth portfolio could create new tax implications. Wealth managers will consider capital gains/capital loss planning when rebalancing portfolios. Maximizing an investor’s returns is the ultimate goal, so tax strategy should be part of every shift that’s made to your portfolio.

WHAT CAN INVESTORS DO?

You should never feel like you’re out of the loop with what’s happening in your wealth portfolio. While you don’t have to take an active role in every decision, you’re always ultimately in control of your own investment strategy. These are a few areas to focus on when shifting market cycles cause distress.

• Check in with yourself about your current risk tolerance and financial goals. Wealth managers will make their own judgment calls when adjusting clients’ portfolios on their behalf, but they’ll always act in the best interest of the individual investor. Your financial goals and relationship to risk will guide the decisions your wealth manager makes. Make sure you’re clear about your priorities and that you communicate with your advisors if anything changes.

• Ask for the information or gut check you need from your wealth manager. Your advisors get it: market fluctuations can be stressful. Watching your wealth expand or shrink due to forces outside your control can make you feel powerless. Investors who do their own research may find themselves with questions and concerns. You might want a better understanding of the strategy your advisors use to diversify your portfolio. You might want to know if you need to worry about your retirement savings or if you can relax because things will rebound soon. These are great questions to bring to your wealth manager. They can give you the context and long-term perspective you need to feel comfortable with your investments or empowered to change your investment strategy.

LET SACHETTA NAVIGATE YOUR WEALTH PORTFOLIO THROUGH MARKET CYCLES

Sachetta’s wealth management advisors understand the complex nature of shifting financial markets, so our clients don’t have to. We carefully monitor and adjust their wealth portfolios to keep them on track with their financial goals, even as the markets ebb and flow. We’re always here to discuss concerns and strategies so our clients feel comfortable with their investments and confident in their financial future. Let’s talk about managing your wealth portfolio with minimal stress—contact us today!

Before joining Sachetta, Stephen Ahern co-founded and served as President of Wealth Management Advisors, LLC. For over thirty-five years, Stephen has provided individual financial, investment, estate, and tax planning and small business consulting to a diverse base of clients. His clients have included key top-level executives, high-net-worth individuals, business owners, venture capitalists, and entrepreneurs. As an established personal financial planner, Stephen has delivered numerous presentations on financial, investment, retirement, and tax planning to corporations and professional groups. He has also written articles on investment, education, and estate planning.