April 24, 2014

Wealth Management

Investing advice: How are you advising clients to invest in 2013?

Florida wealth managers give advice in this special report.

Pat Dorsey
Director of Research / Sanibel-Captiva Trust, Tampa Bay Trust, Naples Trust
Sanibel, Tampa and Naples

Safety is expensive now, says Pat Dorsey. Traditional safe havens such as treasuries, utilities and investment-grade bonds are not good choices at this time, he says. “We haven’t bought bonds for a client in a year or more.” Historically, bonds have performed well, but that’s what makes them risky today, he says. “It’s impossible for them to return in the next decade what they did in the past decade.” Going forward, the return on bonds won’t keep up with inflation, and this puts investors at risk of falling short of their retirement goals, he says. “You will lose purchasing power every year, and that’s not good investing in my view. That’s risky.”

For investors looking for income, Dorsey suggests dividend-paying equities, master limited partnerships and other alternatives. He advises clients to buy equities that yield 3.5% with income streams that grow. He also has created a bond alternative — a portfolio of master limited partnerships that own energy infrastructure and debt-like investments such as trust preferred securities. REITs, he says, are too expensive. “We wind up creating a portfolio mix that has lower volatility while proving better yields and more income growth,” he says.

“Right now, for our growth and income strategy, we’re at about 70% equities, 30% high-income generating assets.”
Dorsey advices clients to stick with a strategy that suits their risk tolerance. “It’s much better for investors to have a path they can stick with even if it’s not the highest returning plan than force them into a plan that they may bail out of at the wrong time,” he says. “Any good wealth adviser understands that part of our job is to help people act with their heads and not their stomachs.”

Next page: Joe Keating, Chief Investment Officer, CenterState Bank

Tags: Banking & Finance, Wealth Management

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