John W. Rafal, ranked by Barron’s as one of the nation’s top financial advisors, is recommending that advisors and clients assume an active posture regarding portfolio rebalancing.
Mr. Rafal, a resident of Old Lyme, Connecticut, is the Founder and current Vice Chair of Essex Financial Services, which is owned by Essex Savings Bank. He notes that the market is now in the middle phase of a long-term bull run with equity returns robust and bond performance lackluster, requiring client portfolios to be revised in order to return to targeted investment goals.
“Before the stock market crash in 2000 and the real-estate bubble in 2008, clients tended not to listen when an advisor said to them, ‘It’s time to rebalance your portfolio,’” Mr. Rafal said. As a result, many clients ultimately experienced significant losses due to the overweighting in stocks.
In a contributed column for the online edition of The Wall Street Journal, Mr. Rafal urges advisers and clients to meet early in 2014 and review the global asset allocation and match it to the agreed-to investment policy statement. He gives an example of a client who was meant to have 60% in stocks, but by the end of the year has 65%. “The idea is to sell 5% and rebalance by investing those proceeds in bonds or cash,” he says.
Mr. Rafal’s full comments on wsj.com can be found at:http://online.wsj.com/news/articles/SB10001424052702303595404579318482308123614.
Essex Financial Services, a wholly-owned subsidiary of Essex Savings Bank, is one of the leading independent financial advisory firms in the country. Cited by Barron’s as the top advisor for Connecticut in 2013 in their America’s Top 1000 Financial Advisors ranking, the firm’s unbiased, independent, client-centric approach has made it a leader in providing exceptional service to clients for over three decades.