Page 18 - Investment Advisor - December 2023

POrTFOlIO PerSPecTIveS

death — running out of money — than work with us indirectly through one with bonds and bond-like instruments.
physical death. of our advisors. I wasn’t [focusing on] high-dividend
stocks till about 10 years ago.
IA: Why aren’t more advisors using IA: Baby boomers, who have saved little
your strategy? for retirement, really are in need of IA: What was the result of your switch?
ds: These stocks are harder to pick than retirement income. Aren’t they? ds: My business exploded. In
growth stocks. As a result, most advisors ds: And Generation X isn’t in any better Connecticut, people were coming from
don’t go near high-dividend common position; they might be in a worse posi- all over to find out what I was doing.
stocks or bond-like instruments because tion. So this need is going to last. Our They were saying, “If you want growth,
they’re harder to research. whole approach is: If you’re living off go to Morgan Stanley, Merrill Lynch
interest and dividends and not touching and all those other places. But if you
IA: Is your strategy only for high-net- your principal, then you won’t run out of want income, Scranton is the only guy
worth people? money. That’s the only way to feel confi- doing it.”
ds: No, the biggest thing about it is dent that you’re going to have [enough]. My business literally went up 10-fold
that we take institutional-style money in about six years, and it was because I
management and bring it down to mom IA: You didn’t always use this strategy, had a unique model. It’s still a unique
and pop. If you have $100,000 to invest, though. tell me why you switched to it. model for any of our advisors who are
we’ll invest it as if you were a $5 million ds: In the late ‘80s and ‘90s I was pretty willing to embrace it.
or $10 million net-worth client. I want much of a growth investor. But in 1999,
to help the average person that really when I started to get concerned about the IA: Apart from the difficulty in picking
needs it. That’s our mission. market — price/earnings ratios were 40 the types of securities you use, why
across the entire market, even over 100 wouldn’t they embrace it?
IA: Please elaborate on the “institutional- in some tech stocks, I knew this wasn’t ds: To become a specialist in some-
stye money management” aspect. going to last forever — that the bubble thing, you have to have the courage to
ds: We’ve taken active management of would burst and that when it did, [the turn away investors that aren’t a good
individual securities — high-dividend market] would take a while to get better. fit for your specialty, and most advisors
stocks and individual bonds and bond- So I thought, “I’ve got to do some- don’t have the courage to do that. They
like instruments — down for mom and thing different.” And I had the cour- lose their conviction in being a special-
pop [to invest in]. The average inves- age to make a transition. I switched ist. That’s why most advisors today are
tor with a little over $100,000 will my model to being more income based stuck being generalists.

I Bonds rise to 5.27%. should “sounds great” and may seem a panacea
While the new composite rate

Clients Invest now? to inflation problems, “a prudent inves-
tor needs to dig a little deeper and see if
anything is appropriate to be included
nvestors may be eager to buy infla- bine an inflation-adjusted interest rate in their portfolio,” Jamie Battmer, chief
tion-linked Series I Savings Bonds that the Treasury Department updates investment officer at Creative Planning,
Inow that the new composite rate every six months and a fixed rate good said in an interview.
has risen to 5.27% for bonds issued for through the bond’s 30-year maturity date. The bonds do adjust with inflation
the next six months. The more appealing The new fixed rate for I bonds issued and sometimes offer “extraordinary, eye-
rate — up from the 4.30% composite rate from Nov. 1 to April 30, 2024, was set at popping numbers,” he said. (In 2022,
for I bonds issued from May through 1.30%, an increase from the 0.90% for amid soaring inflation, buyers flocked to
October 2023 — doesn’t necessarily those issued in the previous six months. purchase I bonds at a 9.62% rate.) “It is a
make these U.S. government securities These securities, though, also come with very easy story to tell at the 10,000-feet
the best choice for clients, however. drawbacks, market experts note, includ- level.” But “you have to weigh a whole
To be sure, low-risk I bonds offer ing purchase limits, a one-year minimum host of additional considerations.”
attractive features. Designed to protect holding time and loss of the last three Based on a client’s risk profile and
investors from rising prices, they com- months’ interest if selling before five years. portfolio needs, there may be a place for

16 Investment AdvIsor December 2023 | ThinkAdvisor.com