Bruce Dzieza is CEO, a partner and an adviser with Willow Creek Wealth Management in Sebastopol. Dzieza answered questions from the Business Journal about wealth management.
What difference does the age of a client make in what you suggest to them as an investment strategy?
Age has little to do with an investment strategy. For example, a couple needs $7,000 a month to support their lifestyle but has $5,000 a month in pension income and $1 million in investments. The dividend yield on the portfolio alone should be enough to cover their needs so the amount of stock/bond allocation is more of a behavioral question then a portfolio strategy.
How do you help a client determine what level of risk they are comfortable with when it comes to investing their money? Are there key questions you ask to assess that risk?
We prepare a detailed financial plan. In that plan we review their wants and needs and together figure out their ability to take risks that will satisfy both their financial and emotional parameters.
With faster technology, algorithms to pick stocks and instantaneous investments, are clients making more frequent moves with their money, not being content to stay with investments for the long haul more these days? What do you tell them if you consider this approach unwise?
We illustrate what the “hot techniques” have done historically. Market timing and attempting to capitalize on the newest and greatest market timing/stock picking technique is a fool’s game. We caution clients to ignore how they “feel” about a stock and let the markets work their magic over time.
What mistakes do you see individual investors making in the current financial climate?
We live in emotional times that tear at the emotions of many investors. The age of social media, instantaneous news headlines, reminders of the global political and financial uncertainties all day long all add to investors being pulled this way or that. It is a mistake to allow emotions to dictate investment decisions. Fortunately, we don’t see this often with clients of our firm because we are able to help them navigate their emotions and stick with their long-term investment strategy.
What is your best advice on planning for a financially secure future?
Develop a plan that you can live with. Life is not a straight line and having options, whether it’s working longer, saving more or lowering your expenses, you will feel more secure if you know what you are both capable and willing to do in the event that life throws you a curve ball.