Full Steam Ahead
Despite troubling headlines and volatility at home and abroad, investment experts advise a steady approach for reaping maximum gains
by Bill Donahue

The “fiscal cliff” over which the United States had been in danger of spilling did not exactly set the best tone for the start of 2013. The would-be event, which national and local media suggested put the nation on the brink of a double-dip recession, had many investors—and, perhaps, may still have them—feeling rather anxious about where and with whom to entrust their money.

Being governed by fear of the unknown, however, is no recipe for growth, according to locally based financial experts. There are many positive signs to suggest good times ahead, after all, especially when investors find the right partner for safeguarding and cultivating their assets.

“[Last year] turned out to be a good year for long-term investors, as the market shrugs off fear of a European collapse, a slowdown in China and fears that the U.S. would go over the fiscal cliff,” says Patricia Brennan, president of Key Financial Inc., a wealth-management firm based in West Chester. As 2013 approached, Brennan was optimistic that the nation’s leaders would find a solution to avert going off the fiscal cliff, though she also suggested it would be “more of a Band-Aid than the structural reform we actually need.”

“We will always have something to worry about,” she says. “Remember Y2K? How about when [former Federal Reserve chairman] Alan Greenspan increased interest rates 11 times in under 18 months in 1994, or when Russia—an entire republic—defaulted on its currency in 1998? These were all crises, yet people barely remember they even happened, and markets recovered. Just keep investing; keep putting as much as you can into your 401(k), and do not be lulled into thinking that the wonderful returns you’ve seen in bonds will continue.”

Although the dawn of any new year comes with its share of uncertainty, 2013 could have more than most, given significant changes in taxation—capital-gains taxes, estate taxes, income taxes (for high-income earners and low-income earners alike), etc.—as well as upheaval throughout the world, which can have a significant effect on financial markets.

Yet investment strategies should not be dictated by climate—especially current events, according to Rosemary Caligiuri, president of Harvest Group Financial Services Corp., based in Langhorne. 

“You have to understand a lot of news [outlets] play to their audience,” she says. “You’ll turn on FOX and they’ll say one thing, and then you turn on CNN and they say something else. Most of that is just hype to get them listening to that station or philosopher; there’s an agenda.”

What investors need is a partner who doesn’t buy into agendas, one who can sift out the hype and fear. “You don’t take your money out of the bank and plunk it in a duffel bag beneath your bed,” Caligiuri adds. She also suggests a good advisor will steer investors toward customized solutions rather than “products.”

“Right now I have seven [financial] newsletters on my desk,” she continues. “If the poor consumer is picking up every magazine or newsletter that advertises ‘the 10 best investments for 2013’ and researches all of them, they’ll find that all of them are different. … The fundamentals never change even though the world is always changing. The world is going to forever been in chaos around us. If you look at the headlines from 1974, they are almost the same as they are now.”

‘Real Planning’
When looking for a financial professional to help manage one’s assets, there is much to consider. Before undertaking such a search, however, an investor should have a clear understanding of his or her risk tolerance and goals for the future.

“We as planners have to look at each individual,” Caligiuri says. “Does the investor want to move to a new location, downsize, maybe move to the islands and live on a sailboat? [An advisor] should act as a coach and sounding board, because if you can’t converse with that person, find somebody [with whom] you can. … A good planner is going to be somebody you can talk with, somebody who’s going to coach, share and speaks a language you can understand.”

“I think it is important to understand that your money is a means to an end,” Brennan adds. “Unless someone is doing a plan, they are managing a portfolio against an arbitrary benchmark, which may or may not have anything to do with your objectives. A good advisor is always going to be looking for ways to decrease your taxes, optimize your cash flow, and make sure your family will be safe and provided for even if you aren’t here to do that.

“When people come in to see me,” she continues, “they are usually asking me two primary questions: ‘Am I going to be okay?’ and ‘Are there any financial landmines that I am not even aware of that could derail our best-laid plans?’ A good advisor is … constantly monitoring your situation to make sure that your plan stays on track. They also manage the assets to the plan, not someone’s pie chart.”

Brennan suggests investors “test” prospective advisors by having each one show a sample financial plan, with cash-flow, income and estate-tax projections, along with a retirement analysis that updates itself every night as of the 4 p.m. close. This is what she refers to as “real planning.”

For her part, Caligiuri suggests working with an advisor who specializes in key areas—be it wealth transfer or estate planning or even divorce financial planning to tackle each client’s unique situation.

“You have specialists in medicine, and the financial world is the same way,” she says. “When you’re first thinking about investing and you’re only 25, you need a growth planner—an accumulation stockbroker. When you’re 55 to 60 years old, you need a retirement planner, someone with a real education and initials after their name who has a specialty in retirement income planning.

“You maximize gains by first handling your basics—setting the foundation and then putting in appropriate investments around that,” she continues. “You may be happy with 3 percent to 4 percent growth, and that tolerance is much lower than someone who is willing to go through periods of negative 10s and 15s to get the positive 20s. It might be an uncomfortable ride, but that’s that risk tolerance. … Of course, you have to invest for inflation.”

One final caveat: Although an investor should pay attention to the headlines, whether encouraging or alarming, they should never invest solely according to them.

“If you do your investing correctly, you can make money in increasing and decreasing markets,” Caligiuri concludes. “There are tools and techniques and products to put in portfolios so that, when there are severe 20 percent to 30 percent drops, our clients don’t feel a thing. It’s about playing offense and defense and finding the right person to help you do both.”

Follow the Money
Need help in the form of a qualified financial planner or advisor to guide safely to your financial goals? The firms and professionals listed below can help usher you through the months and years ahead.

Patrick Cissne/OnePenn Financial Group LLC
Ardmore | 215-287-9909

Financial Divorce Plan LLC
267-202-5158 |

Harvest Group Financial Services Corp.
215-860-6056 |

Innovative Wealth Partners LLC
Bala Cynwyd
610-668-1400 |

Key Financial Inc.
West Chester
610-429-9050 |

The Manchester Group/Stifel Nicolaus & Co. Inc.
610-567-1934 |

Meridian Bank
484-568-5000 |

Retirement Management Specialists
Willow Grove
215-657-8600 |

Sterling Investment Advisors Inc.
610-560-0400 |