Writing down financial goals is a good beginning for wealth strategy, says adviser

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Barry Mendelson is wealth adviser and managing partner with ZRC Wealth Management in St. Helena and Santa Rosa. He answered questions about wealth management from the Business Journal.

What difference does the age of a client make in what you suggest to them as an investment strategy?

Age is just one of several factors that guides a clients investment strategy. The biggest impact that age has on a clients financial plan is it limits the time one has to invest but more importantly limits the time one has to recover from a major market downturn.

Once clients reach the point that they are no longer saving but spending their retirement assets we do counsel them to dial back their risk tolerance so that they will have several years worth of spending in fixed income assets, yet still enough in growth investments (such as stocks) to significantly outpace inflation.

How do you help a client determine what level of risk they are comfortable with when it comes to investing their money? Are there key questions you ask to assess that risk?

At ZRC Wealth Management, we have several in-depth conversations with clients before we agree on the best asset allocation (or asset mix) for them. During our discovery process, we discuss asset allocations and can model how their proposed portfolio would have performed during the 2008–2009 financial crisis sell-off.

We routinely counsel clients that they can always increase the amount of risk in the portfolio down the road. The last thing we would want a client to do is take on more risk than they are comfortable with and then want to sell out during a major correction.

A good example is if a client felt anxious and wanted to sell-out at the end of last year during that horrible December for equity markets, only to sit in cash while the markets moving steadily higher the first half of 2019.

With faster technology, algorithms to pick stocks and instantaneous investments, are clients making more frequent moves with their money, not being content to stay with investments for the long haul? What do you tell them if you consider this approach unwise?

We don’t see that with our clients. From the outset of the client relationship, we counsel clients that “stocks are for the long run” and the single greatest way to outpace inflation.

To effect that, we invest in institutional quality and low cost mutual funds (or exchange traded funds). Good stocks funds can literally be held forever. Just look at the success of the Vanguard 500 index fund or SPDR S&P 500 exchange-traded funds (ETF). Both have rock-bottom fees, great performance and more than $200 billion in assets.

What mistakes do you see individual investors making in the current financial climate?

Letting all of the noise coming out of Washington, D.C., influence their opinion of the financial markets, investing and their long-term financial plans. Well-run companies perform well regardless of who is in office … and so do their stocks.

With the 24-hour constant news cycle, there is a great deal of negative white noise that clients should ignore when considering their long-term investment objectives.

What is your best advice on planning for a financially secure future?

Spend less than you make. Scrutinize every expenditure.

Max-out your retirement plan every year. Save some above that.

Have a clear idea of what your financial goals are, and write them down.

Have a reserve fund.

Find an asset mix you can stick with.

And finally — this is the most important thing — find your passion, and do what you love.