We always encourage clients to “use the news to get in the news,” and 2022 had no shortage of headlines that provided opportunities to showcase their expertise. A few headlines in particular gave ample opportunity to chime in. Here are a few ways our financial services clients participated in the year’s biggest financial headlines.
Inflation takes hold – Throughout the year, rising inflation and the Fed’s efforts to wrangle it under control with a series of aggressive interest rate hikes led to numerous stories about the pain faced by bond investors as well as the opportunity in now higher yielding fixed income products. The inverted yield curve and its historic significance was widely covered, including this article quoting Baird’s Duane McAllister.
60/40 portfolio, 1952-2022 – 2022 was a particularly painful year as investors saw both stocks and bonds post negative returns. In fact, the traditional 60/40 portfolio saw its worst return since 1937 according to research from Leuthold Group. Leuthold was able to illuminate the historical significance of this route in interviews with the Wall Street Journal and Bloomberg. In addition, David Lau, founder of DPL Financial Partners, the commission-free insurance platform for RIAs, used the challenge to point out the difficulty for retirees in relying on the 4% rule, a strategy developed by Bill Bengen that is built on assumptions about the traditional 60/40 portfolio. Lau offered an alternative approach focused on guaranteed income in several articles including in Barron’s.
Politicians take aim at ESG – Political attacks on ESG took center stage and gained steam in 2022 as some policy makers and state treasurers attacked the use of environmental, social and governance (ESG) data by both investors and corporations. Sustainable investors and even traditional investors who incorporate ESG data as material information weighed in, both in interviews like this Associated Press story featuring US SIF CEO Lisa Woll and the informative website from US SIF: The Forum for Sustainable Investment, https://esgtruths.com. Others produced meaningful content such as this from Riverwater Partners in Advisor Perspectives.
Crypto rollercoaster – The spectacular blow up of FTX and Sam Bankman-Fried, the yearlong rollercoaster of all things crypto was a reminder of how new technologies can emerge, blow up—whether due to fraud, faulty premises or both—and still promise to transform industries such that they can’t be ignored. While most financial professionals struggled to offer advice on crypto despite regular and persistent questions from clients and media, some tiptoed into the debate, helping clients learn and experiment while managing their risk and exposure. Some shared tips for clients about what to do given crypto’s horrible year, while others reminded clients of the power of diversification because any company or investment can collapse. And while many in the industry get frustrated by what they view is regulatory overreach, we were reminded of why regulation in fast moving financial markets is so important. Some took the opportunity to remind asset managers why attempting to fight the ‘40 Act is a waste of energy
When the news is moving quickly, it can sometimes be tempting to lay low. But it is in times of crisis and turmoil that true leaders emerge. These clients showed that when you have something additive to say, don’t be afraid to jump into the fray.