After experiencing the financial crisis of 2008, clients have a different outlook on market volatility and are reacting differently to the current environment, said advisors at the Peak Advisor Alliance conference this week in Omaha, Neb. Clients are less focused on returns, and are more focused on not losing money, said Kelly Campbell, president of Campbell Wealth Management, during a panel session Friday morning.
Ron Carson, founder of Peak and founder and CEO of Carson Wealth Management Group, said clients are more concerned about where our country is going than three years ago, and they’re asking for protection. “‘It would be great to make money, but I’d rather just not lose money,’” Carson said he’s hearing from clients.
Steve Lockshin, chairman and CEO of Convergent Wealth Advisors, said post-2008 clients are less focused on money managers and more focused on the macro trends and how these are going to affect whether they should be in or out of the markets. Their main concern is to preserve the assets they’ve got.
Carson said he has been using a low volatility approach to managing his clients’ assets and has been getting positive feedback.
During the conference, many advisors were talking about exploring more tactical approaches to asset allocation given the volatility, including Brian Bogart with RBC Wealth Management in McLean, Va., and Erik Jensen, an investment advisor representative with LPL Financial in Palm Desert, Calif. Others were buzzing about new asset allocation solutions, including software by VPM Connect.
BigFoot Investments, which has just launched an investment process module platform for advisors, was also in attendance at the conference. Lee Johnson, CEO and founder of BigFoot (named after his size 16 shoes), said the new platform takes a more active approach to picking stocks. Using a series of proprietary mathematical tests that take into account growth, profitability, financial condition and momentum, Johnson comes out with 25 stocks per month that the firm recommends for investment. When the market is trending up, advisors should be in these stocks; when it’s trending down, they should be out.
Johnson said he developed the system for his own clients at Lee Johnson Capital Management after he had trouble sleeping at night amid the market turmoil of 2007 and 2008. He started researching old mathematical formulas for investing.
During the panel discussion, Campbell said his asset allocation process involves looking through two lenses: he plans for when the market goes up as well as when the market goes down.
In dealing with the current volatility, Lockshin said he encourages clients not to get caught up in the daily news about the markets. “What sells on TV is the news of the day.”
Lockshin is also focused on keeping clients diversified, but in a tactical way. This can include lengthening or shortening duration on his fixed income portfolio, and adjusting the hedging portion of the portfolio.
The Peak conference, held at the Qwest Center in Omaha, featured presentations by Bo Pelini, head football coach at the University of Nebraska-Lincoln; Mark Moses, Carson’s executive coach; and a panel of six Peak charter members. The conference marked Peak’s 10th anniversary. About 300 to 350 RIAs, independent broker/dealer advisors and wirehouse reps attended.
