Career success in an independent registered investment advisor is simple. The key concept is to always remember that your investment advice has to be in the best interest of your clients. Your entire focus is relentlessly serving your clients by providing high-quality, dispassionate investment advice.
It is easier said than done. Giving good investment advice isn’t about telling your clients what they want to hear. Often quite the opposite. Quality investment advice can also be about telling them something counter to what they have always thought investing should be about.
The best investment advice that I can give to my company 401(k) retirement plan advice clients right now is to largely exit the stock market.
The financial media teaches individual investors that there is a shame associated with investing in the money market at times of stock market upheaval. The financial services firms don’t provide enough information to individual investors about principal preservation in times of economic slowdown.
Until the stock markets finds a bottom, my clients are not concerned about investment gains. Their primary concern is to avoid significant company 401(k) retirement plan investment losses.
I have chance to be wrong. Even my best long-term clients call or e-mail me on the day’s when the stock markets rise over 1%
I remind my clients that we will surely miss part of the upside. I also remind them that we have missed the majority of the recent downside too.
Right now the risk of missing out on meaningful investment gains is low. There is a substantial risk of exposing your company 401(k) retirement plan account to more meaningful investment losses.
Regardless of age, all individual company 401(k) retirement plan participants have a limited time to recover huge stock market losses to their retirement savings.
The worldwide economies are slowing down. The U.S. stock market is expensive at current levels. And the outlook for company earnings (which drive future stock market prices) is cloudy at best.
Now is not a good time for 100% stock market exposure with your company 401(k) retirement plan assets. There is too much risk. The chance of investment reward is too low.
Maybe you have never sat out a stock market correction with a large part of your company 401(k) retirement plan account invested in the money market. Now is a great time to give serious consideration to that investment option.
Ric Lager
Lager & Company, Inc.
