ABiz turns to the pros for investment advice – and you should too.
What is your educational background?
I earned a bachelor of science degree from UL Lafayette. I then received more training and experience while working as an IRS tax auditor for six years, and went on to take additional college course work and testing as required to earn the Certified Financial Planner designation.
How long have you been an adviser?
Just over 20 years.
Exactly what services do you perform?
I help clients clarify their financial status and goals, and work with them to manage their investments, risks, liabilities and cash flow. I specialize in helping business professionals prepare for and transition into retirement through retirement income planning, and have experience with the higher level estate planning issues surrounding business sales. Although I handle most of my clients’ investments, as a Certified Financial Planner, I also work for some clients strictly doing financial planning on an hourly fee basis.
What investment firms do you use in your practice?
Raymond James is my broker/dealer, and through it I have access to an extensive number of asset management and mutual fund companies, as well as stocks, bonds, ETFs, annuities, insurance and a large variety of other investments.
What is the smallest, average and largest portfolio you manage?
The average size portfolio my partner Drew Johnson and I manage is just over $400,000.
Our larger portfolios are in excess of $5 million in assets. We do also manage portfolios as small as $10,000 for friends and family.
What in your opinion are the greatest impediment(s) to most retail investors being successful?
I believe the greatest impediments to most retail investors’ success are an inability to stick with an investment plan through challenging market cycles with a tendency to panic out of investments during the inevitable market downturns. There is also a general lack of discipline to take the time necessary to plan, to postpone immediate gratification, and to consistently save and invest for the future.
Given the poor record of active management outperforming an indexed-, passive-oriented approach (S&P just reported that only 9 percent of the actively managed mutual funds have outperformed their respective benchmarks in 2014), what are your thoughts on this subject? And if you use active management for your recommendations, how do you defend the additional costs, in light of this poor relative performance when measured against an indexed approach?
My experience is that in some market cycles passively managed assets out perform
actively managed assets, and sometimes the opposite is true. Because it is hard to predict which style will be in favor in any given year, we use a combination of both passive and active investments in our clients’ portfolios.
Throughout the oil price fall of 2014, the stock market continued to climb, but at the first of the year, the stock market freaked out. We’re already seeing that settle down a bit, but can you tell us how this commodity that is so important to our economy affects the stock market and what you see happening for the rest of the year?
As we’ve all seen, dropping oil prices lead to lower gasoline prices at the pump. This price drop acts like a tax cut for the consumer, helping to increase spending in other areas of the economy. Lower fuel costs are already causing cutbacks in the oil and gas sector on which our local economy is so dependent. However, it has been benefi cial to the bottom line of energy-dependent industries like transportation and manufacturing. Lower commodity costs should be a boost to our national GDP, and fairly positive for the overall stock market.
Would higher rates be a bull killer?
I don’t thinks so. A rise in short-term interest rates is generally expected no earlier than mid-year, and will be an indication that the Fed sees an improving economy. The rate increase is expected to be gradual and should already be priced into the market.
What is your outlook for the financial markets next year?
Going into 2015 the national economy should continue to recover and will get a little help from lower fuel costs. We do not expect interest rates to rise until the middle of the year. In general, we expect a positive year, and favor stocks over the bond market.
A few takeaways from this month’s financial adviser spotlight:
• The Fed’s first interest rate hike since 2006 should come about mid-year
• While not good for the local economy, lower oil prices will likely boost national GDP
• In general, favor stocks over the bond market
Author: Nanette Soileau Heggie
Title: Certified Financial Planner / Financial Adviser
Firm: The Investment Partners of Acadiana was opened in 2009 and is owned and operated by Heggie and her three business partners. They are an independent firm that offers securities through Raymond James Financial Services (member FINRA/SIPC).