Yahoo Finance’s Myles Udland, Julie Hyman, and Brian Sozzi speak with Brian Walsh, Walsh & Nicholson Financial Group Senior Financial Advisor, about what he’s telling his clients amid the COVID-19 crisis.
JULIE HYMAN: Let's talk about what retirees and people who are very focused on their investments should be paying attention to right now. We are joined by Brian Walsh. He is Walsh & Nicholson Financial Group-- with the Walsh & Nicholson Financial Group, and he's joining us as part of our FA Corner brought to you by PIMCO. Brian, thank you for being here.
And so if you're talking to your clients who are retired at a time when markets are near record highs, how are you talking to them about how they should be approaching their investments?
BRIAN WALSH: Good morning, Julie, and thanks for having me on. It really is an interesting time for retirees. We have to press bond yields across the credit markets. And for those looking for income, it can really be challenging.
So we are looking towards high-dividend-paying areas of the market, specifically in indexes and ETFs that pay high dividends as well as high yield. We like the credit area right now. We think you can take some risk there without giving up too much on the downside.
So we're really repositioning portfolios to take advantage of a low-rate world. And it can be challenging, but the way that we see things is we're going to have to take on a little bit more risk in order to get that income for our clients moving forward.
MYLES UDLAND: You know, Brian, people not taking on enough risk was a theme all through the last cycle that we just completed, all through the 2010s. Is that impact showing up now as people near retirement? Is that still the conversation that you are having with clients who I think-- you know, people will remember this pandemic, but the housing crisis to me changed everything about how pretty much everyone thought about investing, and I think those scars are still showing up in portfolios today.
BRIAN WALSH: I agree completely. We have clients who are retired, and they went from 2008-2009 and wiped out half their savings, and they're reluctant. They have been reluctant to get back in the market. And on the other side of that, investors my age and even a little bit older who were young enough-- I'm sorry, old enough to see how it impacted their families are also not investing the way that they should given their age and time horizon.
So I do think that the 2008 housing crisis and the financial crisis has a lot to do with the risk that has been taken-- has not been taken recently by retirees, and it's showing up a little bit in their preparedness for the rest of their days in retirement.
BRIAN SOZZI: Brian, what's the biggest risk to, one, planning for their retirement just based on-- when looking at the stock markets, essentially really the market is melting up. What's the risk of that? Is one of the risks perhaps that investors go in there and they just chase stocks that they shouldn't be chasing at overinflated valuations and it ends badly?
BRIAN WALSH: Absolutely. You know, as a previous guest had mentioned, sentiment is at an all-time high. Speculation is at an all-time high. That can be very dangerous, especially for those approaching retirement who may be behind trying to catch up. That's a dangerous game to play.
So what we've been trying to focus clients on is what is going to drive long-term returns? And our mindset on this is COVID-19 has really pumped the brakes on the way that my generation and even the younger generations are viewing investing, and it's going to have a theme along ESG as well as digitization. So sustainability and digitization are two main areas that we're looking at and we're talking to clients about investing in in order to buoy their portfolios moving forward.
JULIE HYMAN: Brian, I want to pick up on the point on ESG because I'm curious where that demand is coming from. In other words, are you hearing a lot of new-- about a lot of new products that you're then taking to your clients, or are they coming to you and saying we want to be invested in these kinds of things?
BRIAN WALSH: It's twofold, Julie. So for younger investors, there's definitely a major interest in ESG investing. And as advisors, it's our job to be able to identify trends that are going to benefit clients long term, and ESG is a place for that.
So it's twofold. When you look at the companies that have done well throughout COVID, it's companies have strong balance sheets. They have strong boards that are diverse. Research has shown us that boards with CFOs as female or CEOs as female tend to have more diverse boards of directors, which then in turn have better stock returns. So as we see corporations shifting more towards that dynamic, I think ESG is a really good setup for clients in the equity markets.
JULIE HYMAN: All right, interesting stuff. Brian, thank you so much. Brian Walsh is a senior financial advisor at Walsh & Nicholson Financial Group. Thank you so much. Appreciate it.