Stay calm and carry on

Some Virginia investors were frightened by the stock market’s wild swings at the end of last year.

But more than a dozen Virginia financial advisers are telling clients not to panic when faced with market volatility. Instead, they recommend that investors reassess their portfolios and continue to plan for the long term.

These advisers are among 110 recently named to the SHOOK Top Wealth Advisers in Virginia compiled by Florida-based SHOOK Research.

The firm’s rankings, which appear in Forbes magazine and regional publications, are based on an algorithm of qualitative and quantitative data weighing factors such as revenue trends, assets under management, compliance records, industry experience and best practices. Portfolio performance is not included in the selection criteria due to varying client objectives and a lack of audited data.

Advisers on the list interviewed by Virginia Business say no one should sell their stocks just because of a big one-day drop in the Dow Jones Industrial Average.

“Stay focused on the longer term and don’t make investment decisions based on emotional reaction to what’s happening in the news because you got one day going down 2 percent and the next day back up, and if you adjusted your portfolio every time the swings were like that, I think you would probably go crazy,” says Rebecca B. Hall, CEO of RBH Global Wealth Partners with Ameriprise Financial Inc. in Reston.

Joe Montgomery of Wells Fargo Advisors in Williamsburg, says his 43 years of experience has led him to the conclusion that one of the most fundamental investment strategies is still relevant. “Diversification is still the name of the game,” he says. “It’s not sexy but it works … Most people aren’t really broadly allocated.”

Joseph T. Irvin, senior vice president of investments at Wells Fargo Advisors in Warrenton, urges clients to not abandon an investment plan when the market goes haywire.

“The main thing I tell clients during periods of heightened volatility is to not panic and stay invested,” Irvin said. “Unfortunately, volatility in the stock market is something that investors will always have to deal with, so having a plan and staying the course is so important to having success over time.”

Nick Harris, a senior vice president at Cassaday and Co. Inc. in McLean, agrees. “When market volatility increases, the unpredictability of our emotions tends to increase as well,” Harris says. “Emotions can take over and make you want to hit the eject button and try to make a loss less painful rather than remain invested and wait it out … Our guiding principle is ‘stay calm and ignore the noise.’”

Brian Ford, managing director and senior portfolio manager at RBC Wealth Management in Richmond, says people tend to lose sight of their plans and what’s right for them at two distinct times: “One is when the market reaches all-time highs, and the other is when the market reaches significantly low periods.”

John A. Gill, senior managing director of The Gill Group of BB&T Scott & Stringfellow in Virginia Beach, described the current cycle as “the most unloved bull market in recent history.”

“Our job is to keep clients focused on the long term and fundamentals that ultimately win out, so the current noise doesn’t cause them to abandon their investments at the wrong time,” Gill says. “The declines have led some investors to feel a greater sense of fear, which is perfectly normal, but we’ve been working hard to help keep clients invested and avoid selling at poor prices.”

Another common piece of advice is that a period of volatility can be a good opportunity for investors to scrutinize their portfolios.

“Whenever there is a real big market disruption like we had in the fourth quarter, it’s particularly important to reassess your plan,” Ford says. “Reassess your plan and understand if you’re still on track for that — that’s the most important thing that clients should do right now.”

In fact, Patrick McAleer, who is in the private wealth advisory practice of Kasch, Levitch, McAleer & Associates with Amerprise Financial in Glen Allen, believes clients should revisit their portfolio strategy every six months.

“When clients do this, they are usually better prepared for downturns — although we never know when they will occur — but we know markets will have downturns periodically,” McAleer says.  “At this point, we are working with clients to rebalance portfolios if needed, which … may include selling a small percentage of fixed income assets in favor of buying equities.”

Carl Mahler Jr., president of The Pinnacle Group with Raymond James Financial Services in Midlothian, says his clients were not surprised by the recent market volatility. “The longer the bull runs, the closer we get to a decline, so we’ve been expecting this long-overdue correction,” he says. “We meet clients typically twice a year and have been reminding them this is coming. … We filled the grain bins and have weathered the storm.” 

The recent market volatility actually created opportunity for investments in some stock segments, several advisers say.

Christine M. Emond, of EBA Wealth Strategies with Ameriprise Financial in Fairfax, notes that some stock prices dropped 25 to 40 percent from their 52-week highs. “Assuming a company’s outlook remains strong and we continue to have relative strength in the economy, this could offer an opportunity,” she says.

Tim Mullins, managing director of Mullins & Gordon Financial Consulting & Wealth Management with Wells Fargo Advisors in Richmond, says he would advise clients to take more exposure in sectors where there is value, such as health care, and others that sold off during the fourth quarter, such as financial stocks.

He notes that, as investors rotate out of some sectors, they generate cash. “In our view, if your current allocation is still aligned with your goals and objectives, it’s important to put that cash back to work,” he says. “Resist the temptation to sock away cash out of fear.”

Several advisers noted that the increase in interest rates in the past year has created an investment opportunity in money market funds, which are now earning 2.25 percent or more.

“In my opinion, the recent increase in interest rates made some areas of the fixed-income market more attractive,” says Scott Garnett, senior vice president of Wealth Management at UBS Financial Services Inc. in Richmond.

Although some stocks are more attractive because of a decline in prices, some advisers question whether they are attractive enough. Kimberlee A. Barrett-Johnson, president of Barrett-Johnson & Associates with Ameriprise Financial in Charlottesville, tells investors to be cautious.

“We are advising clients to take some risk off the table and to be prepared for further market declines, in order to protect their long-term goals,” Barrett-Johnson says. “Now is a good time for clients to re-evaluate their risk tolerance and make sure they understand the risks they are taking and that they’re comfortable with their current strategies.

“We have been helping our clients prepare for a market decline for some time, as we have felt that stocks are overvalued,” she adds.

Christopher L. Schreiner of The Mason Cos. in Reston, says it’s also important to remember that market volatility is normal. “We are advising clients to hold diversified portfolios designed to withstand market volatility.”

Nelson Edward “Eddie” Link Jr., senior vice president of Wealth Management at UBS in Roanoke, says the company’s investment playbook for clients this year centers on four key strategies: Stay invested; be selective and own quality; stick to your long-term plan and diversify; and be prepared for more volatility.

“Now is a good time to rebalance portfolios,” Link says.  “The markets have always been and will likely remain volatile. Focus on the long term and use bouts of volatility to add to quality stocks when they go on sale.”

SHOOK top wealth advisers in Virginia