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The Tidal Financial Group (Tidal) expanded rapidly over the last decade and encompassed multiple ETF related brands including Toroso Investments, Tidal ETF Services, and the ETF Think Tank. Going forward all activity will be unified under the Tidal brand as we become one company, dream, family, and platform focused on holistic ETF customer solutions.

Get Think Tanked Distilled with Vance Barse

The current environment of high inflation, an aggressive Fed and cratering asset prices has created an unprecedented environment for financial advisors. Many are dealing with circumstances that haven’t needed to be dealt with in decades. Vance Barse, the Founder of Your Dedicated Fiduciary, which manages a number of family portfolios, is one of those folks and joins the ETF Think Tank to offer his insights into how advisors can navigate these waters.

Barse said that his firm is not experiencing any panicked calls from clients, but there is very much a sense of “what should I do now”. He sees fear levels that are incredibly high and isn’t sure when current issues, such as when are Chinese ports going to open and when will oil supply start balancing out demand, are going to be solved. In many cases, it’s going to take time and none of us knows the outcome.

He does see some clients willing to dabble in alternatives for the first time. The biggest key in implementing this within client portfolios is due diligence. Performance chasing can be incredibly dangerous and some of that is already happening within commodities. Barse notes that when clients try to roll money into past winning strategies, it usually doesn’t work out. It’s important to assess with clients if their overall objectives are still the same or if some type of life event or risk tolerance change is affecting how they invest. The conversations he’s having have not necessarily been uncomfortable, but he has had to lay out various scenarios and actions to take for some.

Some of Barse’s conversations have specifically had to do with bonds. With the 60/40 portfolio performance now looking similar to 2008, it’s important to answer the key questions first. For example, does the client have enough cash to survive the near-term. From there, he can move the conversation towards goals and risk tolerance. He tries to paint the bigger picture. If there are issues, the conversation pivots to risk management and hedging and how that can help protect against downside volatility. Again, he tries to lay out scenarios and potential actions for clients.

Other key takeaways:

  • Why aren’t more financial advisors embracing ETFs as a structural solution? Barse believes that some simply don’t understand how they work and how they can be better than mutual funds. Some are overwhelmed by the sheer number of ETFs out there. Policy statements may not allow for it. Barse says there is some advantage to using mutual funds in how advisors can tax loss harvest and potentially save clients a lot of money. The ability of mutual funds to distribute capital gains during down markets may be a challenge this year.
  • Many are trying to figure out where inflation will be next month, but the level of tea leaf reading can lead to unhealthy speculation. It’s impossible to figure out what OPEC might do to impact oil supply. With respect to clients, Barse says that if he has a client in a proper asset allocation, they should be willing to ride out some of the short-term volatility. If there is a material change in their life or a change in risk tolerance, then it’s time to make adjustments.
  • Barse sees a real paradigm shift on inflation. The Fed is trying to cool demand to solve a supply side problem. So far, we haven’t seen volatility hit a level that would be consistent with past bear market bottoms. He sees continued volatility ahead.
  • Changing demographics could affect how the economy changes in coming years. We have an aging population. It looks like population growth has plateaued and is coming back down. That means fewer people to work. Barse thinks we could see elevated inflation relative to regimes over the past two decades. This is coming up in a lot of his client conversations.
Disclosure

All investments involve risk, including possible loss of principal.

The material provided here is for informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested, and can be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Investment involves risks including but not limited to, possible delays in payments and loss of income or capital. Neither Toroso nor any of its affiliates guarantees any rate of return or the return of capital invested. This commentary material is available for informational purposes only and nothing herein constitutes an offer to sell or a solicitation of an offer to buy any security and nothing herein should be construed as such. All investment strategies and investments involve risk of loss, including the possible loss of all amounts invested, and nothing herein should be construed as a guarantee of any specific outcome or profit.  While we have gathered the information presented herein from sources that we believe to be reliable, we cannot guarantee the accuracy or completeness of the information presented and the information presented should not be relied upon as such. Any opinions expressed herein are our opinions and are current only as of the date of distribution, and are subject to change without notice. We disclaim any obligation to provide revised opinions in the event of changed circumstances.

The information in this material is confidential and proprietary and may not be used other than by the intended user. Neither Toroso or its affiliates or any of their officers or employees of Toroso accepts any liability whatsoever for any loss arising from any use of this material or its contents. This material may not be reproduced, distributed or published without prior written permission from Toroso. Distribution of this material may be restricted in certain jurisdictions. Any persons coming into possession of this material should seek advice for details of and observe such restrictions (if any).

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