Finding Some Financial Footing

by Madeleine Maccar | Jun 23, 2023
Finding Some Financial Footing

If you’re watching televised news, you’re no doubt familiar with the onslaught of reports from the financial world that’ve been sounding decidedly grim lately.

A headline-making string of floundering financial institutions is invoking unwelcome memories of 2008’s too-big-to-fail crisis. Both the persistent inflation that’s limiting households’ buying power and the post-lockdown price hike that’s affecting just about everything look more and more like permanent market corrections rather than fleeting pain points. And even though the debt-ceiling bill was signed with just enough time to avoid a U.S. default, there is lingering uncertainty surrounding its impact, all of which—and more—can make it hard to summon some optimism about the current state of the economy.

But financial advisors and bankers do agree that, no matter how dire current trends seem to be, everything comes in cycles and this, too, will pass.

Still, those professionals acknowledge that it’s cold comfort knowing that the tides will turn eventually when so many are feeling the pinch now. Whether it’s reluctantly moving back the goalposts for retirement plans that seemed so tantalizingly within reach or cutting down on unnecessary expenditures or adopting any other kind of cost-saving measure, there’s no question that South Jersey residents are concerned about their financial futures right now, making it hard for some to believe that the light at the end of the tunnel isn’t really an oncoming train.

The Financial Perspective

Stan Molotsky, president and CEO of SHM Financial Group, is quick to identify the prevailing trends he and other financial advisors have their eyes keenly turned to, and ways to mitigate the fear that naturally accompanies a difficult market.

“Chaos and confusion are at the top of the list, which is nothing new, but it’s continuing with all the things that are going on internationally, politically, this turmoil going on, and, of course, the banking situation that was going on [a few] weeks ago,” he says. “People are concerned, and rightfully so, so it comes back to our old premise of always hoping for the best but preparing for the worst. I think that’s a pretty good adage going forward … Do what you can do, but in the meantime, make sure you know where the exits are and get there before you get stampeded. Part of our process, and should be everybody’s process, especially today with the environment we’re in, is to always have exit strategies so that you know when you can get out, how you can get out and if you have to get out.”

Fortunately, the region is also filled with trustworthy experts who are here to help navigate today’s turbulent waters and stormy weather to steer their neighbors toward tomorrow’s brighter days, as they emphasize that even this seemingly interminable stretch of shaky footing and uncertainty isn’t without its opportunities.

“There’s specific trust that exists that is not considered part of the general debt of the U.S. Treasury—when they issue treasury bills, treasury notes, treasury bonds, that’s a direct obligation,” says John Torrence, managing partner at Masso Torrence Wealth Management. “A year ago, nobody bought T-bills except for banks because the yield was a joke. I can tell you that clients today, a 5%, three-month T-bill—they’ve been buying them in droves. Droves. … [Recently] there became a divergence between what a CD rate was and what a treasury rate was, and all of a sudden, the treasury rate started to spike a little bit because the thought [that the government] could be crazy enough to let this default made treasury yields go up higher. In other words, if you bought a three-month CD, you might have gotten 5%; if you bought a three-month treasury, you might get 5.2% because of that lack of certainty.”

Molostky, too, sees the investment opportunity in the current financial landscape, though he understands how hard it can be to take a long view when the immediate now seems packed with road blocks.

“We live in interesting times … You have to try to block out the noise and move forward,” he says. “You can take advantage of the high certificate of deposit rate from the bank and the high treasury bill rates that you get … and then look at something a month or two down the road—not every day. There are great, great opportunities in the marketplace and in the fixed income rate that people should really be taking advantage of.”

With the shift to remote interactions and self-guided options putting an individual’s financial information just a click or tap away, those lockdown-initiated shifts have become the standard that many banking and financial clients now demand. That trend, however, is a mixed bag of pros and cons, with people more keyed into their investments and financial position than ever—but also more prone to panic if their portfolio had a bad day.

The upshot, though, is that it gives financial advisors an additional opportunity to not only placate but also educate those clients who benefit from a little extra expert assurance.

“When I started the business in the mid-’90s, you got your updates at the end of the day: If you put on the TV and you happened to put on a business channel, you might have seen if the market was up or the market was down, and that was kind of the end of it,” Torrence explains. “Now, with the proliferation of software, you literally can click a button on your phone and you can see up-to-the-minute if your account is up or down. And the problem is on down days, people look at that and it’s immediately, ‘I lost $50,000 today, is that something I should be concerned about?.’ … It depends on the client but, to a degree, it can make things a little more difficult because, seeing it in real time, you may get calls that you ordinarily wouldn't—but it is part of our job to help clients cut through the noise.”

The Banking Side

South Jersey’s banking professionals, too, are cognisant of the rocky road still ahead of their clients, and they’re all too aware that bracing for any number of potential scenarios to come to fruition adds to the inherent challenges of waiting for market fluctuation, corrections and trends to settle into something a little more familiar and less frustrating, or at least that comes with a more prescribed course of action.

“Among the trends banks are closely monitoring are the flow of deposits in this highly competitive rate environment, as interest rates have risen to levels not seen in years,” says Shari Kruzinski, executive vice president, chief consumer banking officer, at WSFS Bank. “Coinciding with this trend, as a result of rising interest rates and the uncertain economic environment, is credit usage. The cost of borrowing has risen and coupled with inflation, consumers could struggle to repay.”

“There is no doubt that this is a challenging environment for investors, with a wide range of possible outcomes over the next 6-12 months—including a possible recession or a potential ‘soft landing’ at the other, positive extreme,” adds Mark Hoffman, Fulton Bank’s chief investment officer. He continues: “History tells us, though, that the next 6-12 months are not likely to define longer-term investment returns.”

Positioning a client to not just survive but thrive is possible in the hands of qualified expert, of course, but there needs to be an open and honest exchange between both parties to define both customer and investment characteristics, as the likes of expectations, risk tolerance, financial position and ability to hold on through some daunting market challenges vary between individuals.

And, as Hoffman points out, there is a long-term payoff in riding out the worst of it with the right professional at your side.

“Each investor is unique: The right portfolio will be different for each person or organization, and working with an advisor who understands you can make an important difference in times like these,” he explains. “We’re excited about the opportunities for growth over the next 3-5 years from innovations in technology and cheap renewable energy that will reward investors who have confidence in their portfolios and can stay invested through some potentially rough periods in the near term.”

Banks’ headlong run into embracing technology since the early days of lockdown kickstarted that necessary pivot is common knowledge at this point, as is the subsequent consolidation of hyperlocal brick-and-mortar branches. Those institutions have long since shifted from implementing in-demand digital offerings and are now managing the component of their service menu that puts clients in the driver's seat when it comes to keeping a close eye on their financial position—as well as offering them flexibility in access while utilizing high-tech options to keep clients’ funds safer than ever in a time when bad actors are getting increasingly savvy in their phishing schemes.

“Digital banking tools, such as online and mobile banking, continue to rise in popularity, as they enable consumers to bank when and where they want with tools such as mobile deposit and the ability to closely monitor their transactions in real-time: With the use of online and mobile banking, consumers can deposit checks remotely, set up bill pay to avoid the hassle of sending a check through the mail, and send money to friends and loved ones via Zelle,” says Kruzinski. “Mobile banking can also help protect consumers from fraud, particularly check fraud, which continues to increase as fraudsters steal checks from the mail and ‘wash’ them to change the recipient and amount.”

The Experts’ Outlooks

It is admittedly hard to feel secure in times of flux, and it’s an uncertainty that’s exacerbated by the tenuous nature of predictions, as Torrence points out that “forecasting what may occur in the market is a difficult, often inaccurate exercise.”

But there are some reliable constants to take comfort in, like dedicated, local experts who keenly understand their neighbors’ financial worries.

“Despite advances in technology and the ease of online account opening, the vast majority of this activity still happens in the branch, [where] customers also have the opportunity to meet with our other business partners, including our mortgage and wealth management teams,” Kruzinski continues. “Customers take comfort in knowing there is access to a bank in their community, especially when the bankers are engaged in the community they serve.”

Of course, proactively positioning your portfolio, investments and available funds to meet the unknown by preparing for the worst is one of the best ways to empower yourself with as much peace of mind—and guaranteed accessible assets—as reality allows.

“We try and stress always making sure that you have emergency money that you can get your hands on,” Molotsy advises. “If not liquid, having at least three to six months’ worth of your expenses somewhere, whether it’s in a drawer or a savings account—forget what it can or can’t earn— just in case there’s an emergency so you can tap that without going into your other [savings and investments] unless you have to. … If someone had told you that two of these large banks would have failed, you would have said, ‘No, that’s impossible.’ But it happened in, like, 26 seconds because of the ability of people to go on their computer and move money from bank to bank to bank. It seems impossible until it happens.”  

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Author: Madeleine Maccar

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