Expert advice to help you understand wealth management and financial planning
By CAROLINE GOBBLE
Author, businessman, and Founder of The Economics Press, Inc., John L. Beckley once said, “Most people don’t plan to fail. They fail to plan.” Relevant to many aspects of life, Beckley’s quote certainly applies to the importance of financial planning and wealth management. Today’s world sees challenges everyday ranging from conflicting political viewpoints, to increasing poverty and unemployment rates, to shipping jobs overseas to cut costs. Young people will be forced to deal with a lack of social security one day, while families want to invest money to both plan for retirement while also providing for supporting family members. The financial world can be difficult to understand and navigate, thus the importance of seeking out a financial advisor that can work to help meet financial needs and desires of his or her clients.
Steve Gaskins with DWM Advisors, LLC in Wilmington, NC, Carolyn Polston with Edward Jones in Wilmington, NC, and Carter Sitterson with Sitterson and Company, PA in Kinston, NC, are financial advisors. Polston works mainly with retirement planning and helps her clients’ “money outlast them.” According to Gaskins, “clients need more than just an asset manager. They need a financial quarterback, someone who can also coordinate tax and legal professionals, offer concierge services, and provide solutions for a number of family issues.”
Sitterson stresses the importance of “finding ways to invest in America, whether through land/real estate projects or companies that manufacture their products in America. Since it is difficult for individuals to make those types of investments, and impossible for small investors to do this individually, I'm researching who is offering these types of investments.”
So how do folks of all ages navigate the financial market and make decisions when it comes to saving and investing? Our advisors offer some ideas and words of wisdom to help understand some of the various aspects of wealth management and financial planning.
Investing Strategies for Today's Market
Today's financial market is uniquely volatile due to the international connectedness of all economies, also known as the "global economy." The American economy is influenced daily (both negatively and positively) by factors in far-flung countries that are outside of our control. The financial crisis in Greece and the devaluation of China's currency are two of the most recent negative influences, which have brought the global market down. It would be remiss if we did not mention the effect oil plays in the fluctuation of the global market. With these and many other factors, the best investment strategy anyone can implement is to spend less than he or she brings home in wages. Avoid credit card debt, high interest loans, etc. Once these debts have been paid and there is cash to invest, the first place to look is a company sponsored retirement plan (401k, 403b, IRAs, various other plans). These plans vary widely, some offering a company match, and we always encourage people to take advantage of a matching retirement plan. That's just free money being deposited into your account!
Regarding an investment strategy, it is typical for younger investors to be heavily weighted in equity or stock investments. The most common form of equity investment is through a mutual fund or through ownership of individual shares of stock. The reasoning behind younger investors focusing on equity investing is that their time horizon is lengthy. A young person of approximately 25-30 years old has at least 30-40 years until retirement, so they will want their investments to focus on growing in the long-term, assuming the investment will be able to withstand any market fluctuations over that lengthy time period.
As an investor ages, it is typical for advisors to caution against a heavily weighted equity portfolio. This is due to the shortening time horizon. As retirement age nears, an investor does not have the luxury of a 25-year window in which to absorb a downturn in the market and then realize significant appreciation once the market rebounds. A good rule of thumb is to subtract your age from 100 and that should be the equity ratio in your investment portfolio. For example, if you are 30 years old, 100-30=70, so 70% equity, 30% fixed income or other investments. While this may be a good "rule of thumb," it doesn't apply across the board, as younger investors really have no need for fixed income before the age of 50 or so.
Importance of Saving for Retirement
Rising healthcare costs and the potential lack of funding for Social Security should have everyone saving as much as possible for retirement. Once we stop working, we will be living directly from our savings and there is no guarantee for the younger generations that we will have Social Security or other government safety programs.
The Compounding Effect
By investing early, a young investor can take advantage of compounding growth and/or interest. (Dividends can also be reinvested for a longer period of time, accumulating significant added investment.) The average annualized compounding return of the American stock market is approximately 10%. This means if you were to invest just $50 a month for 30 years (from age 25-55), you would have approximately $100,000 in your investment account. From age 55 to 65, your investment account would grow from ~ $98,696 to ~ $265,556! In other words, by starting early, an investor is laying the foundation for potential huge returns in the latter years heading into retirement. It may not seem like much when you are young, but the wonderful world of compounding is an investor's best friend.
A younger investor should be almost completely non risk-averse. With a lengthy investment time horizon, the goal should be to grow his/her investments as much as possible, which means taking risks. As an investor ages, and the investment time horizon shrinks, it is appropriate to become more risk-averse in order to protect the growth of earlier years. Almost all financial advice for those nearing retirement is geared towards preventing a retiring individual from losing everything in a huge market meltdown just days or weeks before retirement.
DWM Advisors: More Than an Asset Manager
By CAROLINE GOBBLE
DWM Advisors, LLC is an independent financial advisory firm offering an array of services to affluent families, individuals, small businesses, and non-profit organizations. DWM was founded in 2009 when Joe Davis moved his successful wealth management team from a large brokerage firm, to the firm’s headquarters in Durham, NC. DWM has since opened an office in Nags Head, NC and now Wilmington, NC, where Stephen Gaskins, CFP® serves as the Managing Director of the Eastern Region. After being friends since suitemates in college, Steve and Joe made the decision to merge their practices. Together they have over 60 years of experience advising successful clients. Steve is a 1981 graduate of Campbell University with a major in Trust and Wealth Management, and has worked in large bank Trust Divisions and Wealth Management firms advising high net worth clients on creating and preserving wealth and passing it to their heirs.
The mission of DWM Advisors “is to align our interests with that of our clients. We strive to use our experience, expertise, and integrity to enrich the lives of our clients. We view our mission as spanning beyond achieving our clients' goals and the goals of our firm. We also feel it is important that our company stands as a valuable contributor to society. With that belief in mind, at DWM Advisors, we work hard to initiate, partner around, and drive social entrepreneurial ventures that are efficient, self-sustaining, and beneficial to society.”
At DWM Advisors, a set of core values is the motivating force behind all of their services and actions: integrity, communication, expertise, and social entrepreneurship. They use a family office service model, which is available to all types of clients.
"Because of technological advancements, we are now able to offer a family office service model to people who may not have been able to receive such an array of services five years ago. Clients need more than just an asset manager. They need a financial quarterback, someone who can also coordinate tax and legal professionals, offer concierge services, and provide solutions for a number of family issues," said Gaskins.
Throughout their lives, Steve and Joe have focused on social entrepreneurship and charitable giving, and they encourage their clients to do the same. Locally in Wilmington, Steve is currently President of the New Hanover Community Foundation. He has served on numerous other boards in New Hanover County and is also a Trustee of the Campbell University Foundation and member of the Campbell Presidential Board of Advisors.
To learn more, visit dwmadvisorsllc.com.
Edward Jones: Making Sense of Investing
By Caroline Gobble
Edward Jones, a Fortune 500 company with nearly 7 million clients, is an investment firm whose mission is “to help individuals reach their serious, long-term financial goals.” Focusing on developing personal relationships with individual investors in their own communities, Edward Jones seeks to “identify our clients' lifetime goals and help them invest wisely, using long-term strategies, so we can help achieve those dreams.”
With its headquarters located in St. Louis, Edward Jones has more than 11,000 offices in the U.S., 17 of which are located in Wilmington, NC. In 1990, financial advisor Carolyn Polston began working in Wilmington’s only Edward Jones office at the time. For 25 years, Polston has had an impact on the Wilmington community. She has led workshops, worked with area attorneys and CPAs, and met with businesses and individual investors. With a big focus on retirement planning, Polston strives to “make sure her clients’ money outlasts them.”
In September 2014 Polston entered the Retirement Transition Plan at Edward Jones. A distinctive program in the financial industry, the transition plan asks that financial advisors wanting to retire give a two year notice. The firm will then name successor advisors who will help with the clients of the retiring advisor by working together during the transition period. Polston said the program offers her clients “a unique transition from a 25 year veteran to existing advisors who are building businesses. The goal is to provide a very smooth and quality transition for all involved.” Polston is working with four successor advisors to transition all of her clients by August 2016: Tucker Polston grew up in Wilmington, NC and graduated magna cum laude from the University of South Carolina with a Bachelor's degree in 2007 and summa cum laude with a Master's degree in 2009. He joined Edward Jones as a financial advisor in 2012; Brenda Spychalski, who was born and raised in South Bend, IN, has lived in Wilmington since 2014. She has a Bachelor's degree in management and administration from Indiana University at South Bend. She has been in the finance industry 12 years working for Paine Webber, Shearson Lehman Hutton and Edward Jones; JD Capps is originally from Jacksonville, NC and has lived in Wilmington since 2008. He has a degree in business management with a concentration in finance from NC State University as well as a Masters in accountancy from the University of North Carolina at Wilmington. He has worked in the financial services industry since 2006 with Edward Jones and McGladrey LLP.; and Michelle Price is a native of southeastern North Carolina and a Wilmington resident since 2006. She began her career in 2007 at Wells Fargo Advisors Wealth Brokerage Services, and earned the Certified Financial PlannerTM designation in 2014. She graduated summa cum laude and with honors from East Carolina University with a Bachelor's degree in business administration with a concentration in finance.
Prioritizing individual investors’ needs and goals, and nurturing the relationship between financial advisors and their clients has led Edward Jones to rank highest, in a tie, in investor satisfaction with full-service brokerage firms, according to J.D. Power 2015 Full Service Investor Satisfaction Study. To learn more visit edwardjones.com.
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