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New Year's Can Strengthen Advisor-Client Ties

By Thomas Coyle December 28, 2016

Change is in the air as we head into 2017. In this two-part series — and in the face of potentially significant political, tax, monetary and market-cycle shifts — we’ve reached out to six financial advisors to learn how they’re preparing clients for the year to come. This is part two. Read part one here.

For Melissa Sotudeh of Halpern Financial in Rockville, Md., New Year’s is a client-education opportunity — and a new year that promises changes on several fronts, as 2017 seems to, is an especially valuable opportunity.

For starters, however, Sotudeh and her colleagues use the impending year change to “recommend some housekeeping and goal-setting tasks — for example, updating account beneficiaries if needed, or planning for larger expenses in the year ahead,” she says. “We also encourage our clients to think about their financial progress for the year in terms of net worth — assets minus liabilities or debts — once all of the final statements for 2016 come in.”

Specifically, Sotudeh, who manages about $250 million, encourages clients to take stock of progress. “Have they made progress to shrink debts and increase assets?” she asks. “Is their spending bringing them closer or farther away from what they find truly important in life?

In terms of topics, Sotudeh says “bonds and interest rates” have dominated her client conversations in recent weeks. That’s because “rates are rising, and this is an investment theme that represents a big change from the status quo.”

Besides investing, understanding the rate environment could help clients plan for big-ticket purchases before consumer lending gets “more expensive due to rising rates,” says Sotudeh.

On the education front, market-inflection periods can also help clients consider “what they own and why,” says Sotudeh. In this light, "current events give us a great opportunity to explain how bonds work and how they might be impacted by recent changes.”

These teaching efforts appear to pay off.

“We do not typically have a problem with keeping clients on track with their financial plan,” says Sotudeh. “We actually get more calls from the media when market swings occur than we do from our clients.”

Going into the New Year on the crest of record-setting gains on Wall Street puts Householder Group advisor Alexander Koury in the role of a wet blanket on client euphoria.

“When the markets start to get overheated, emotions begin to run high and it is my job to temper those expectations,” says Koury, who manages $480 million. In this task, he leans heavily on the old saw, “Be greedy when others are fearful, and be fearful when others are greedy.”

Assuming an investor already has “a long-term plan that can get them through the short-term volatility” that may stem from a new U.S. president and rising rates, Koury says advisor-client priorities should be tax-planning strategies.

“While everyone is thinking about the stock market, I am thinking about my client’s future tax liabilities and how I can help them put plans in place today to save them thousands, if not tens of thousands, of dollars in the future,” says Scottsdale, Ariz.-based Koury.

Meanwhile, Troy, Mich.-based Leon LaBrecque is preparing clients for “a whole a whole new world” by — among other things — rerunning their tax plans in light of a possible President Trump law change.

In this light, as what-ifs for next year, “we accelerated property taxes and income tax payments, and suggested larger charitable contributions,” says LaBrecque, who manages $650 million at his own firm LJPR Financial Advisors.

Bigger picture, LaBrecque — who says he has a “guns and hoses” practice due to his firm’s affinity for police and fire department personnel — thinks “the things that worked for the past eight years have flipped about 180 degrees.”

His before-and-after list is worth sharing. “We were globalizing, now we’re thinking of isolating. We had no inflation, now inflation looks probable. We were thinking of raising taxes, now we will probably cut taxes. We were using monetary policy, now we appear to ready to turn on the fiscal spigot. We were regulating, now we may be deregulating.”

In sum, “it’s a new game,” according to LaBrecque. “We were playing checkers, now we’re playing chess.”