March 2020

Managing Director Colin Carter quoted in Dallas Business Journal

Dallas Business Journal

How wealth managers are shifting strategies amid coronavirus pandemic

By Rebecca Ayers | March 24, 2020

How local wealth managers are reacting, changing and reallocating their client’s portfolios depends on a variety of factors.

For instance, it depends on how much risk their client is willing to have and what their age is, but ultimately, it depends on what happens with the coronavirus pandemic.

The pandemic has been one of the main catalysts for both the Dow and S&P 500 to experience thousand-point swings and has led North Texas “non-essential businesses” to face a new work-from-home reality, limit key operations or halt altogether in some cases.

Tiedemann Advisors’ Managing Director Colin Carter explained that the investment and wealth management firm has always run a diversified portfolio for its clients by keeping assets, such as bonds and credit hybrid securities, in its portfolios.
Carter, who is based in Dallas, admits that the swiftness of the market correction took not only him, but everyone by surprise. More recently, one of the firm’s strategies was to sell both appreciated bonds and certain international equities to fortify its cash positions.
“The first thing we want to do is make sure that our clients have ample liquidity in their portfolios,” he said. “That's one of the reasons we are raising our cash position. Then, we also want to raise cash to take advantage of opportunities once this crisis ebbs, and we have a better sense of what the next several quarters look like.”

Bernstein Private Wealth Management’s Greg Young echoed a similar strategy, and explained that, once the firm came out of the global financial crisis, it implemented a methodology so that its clients' portfolios could more readily manage its exposure to risk, especially in uncertain times like these.

Essentially, the firm started trimming its clients' equity exposure starting in January and forward with a corresponding increase in either bonds or bonds and cash, Young said.

“That type of approach, which is geared to a client-specific underlying allocation, whether it's conservative or aggressive, has so far this year — during what is turning out to be a very challenging market environment — actually helped reduce the volatility that clients are experiencing in their portfolios,” he said.

Meanwhile, Carter Tolleson, CEO of North Texas' Tolleson Wealth Management, said that the firm has always had a wealth preservation strategy and doesn’t make knee-jerk reactions.

“We're not traders,” Tolleson said. “We're built for the long-term and invest for the long-term. Over the next few weeks or a month, we will actually start rotating more into equities and add a little risk in the equity piece. We're coming out of fixed income. … Again, it's not a big shift, but we do see some opportunities there.”

Tiedemann's Carter said that going forward his firm needs to see some stabilization in the virus’ infection rate to have a sense of the recovery of not only people, but the markets themselves. In the meantime, he said the wealth management shop believes there are better opportunities in the U.S. than elsewhere, and the firm is repatriating accordingly.
“When we come out of this, there are going to be certain areas that will benefit or will be even stronger in the recovery mode,” Carter said. “That can include certain credit card companies or payment companies, certain technology companies involving 5G or cell towers, but there are going to be some very unique opportunities once visibility in the economy and earnings return.”

Bernstein’s Managing Director Bowman Hallagan, who is based in Dallas, said that although the speed at which the market will recover is unknown, timing remains critical when investing in the market after it regains strength.

“Participating in that initial burst is critical,” Hallagan said. “What we are trying to caution clients away from is that market timing aspect of portfolios, which always feels like the right thing to do, but inevitably will create a drag on the portfolio.”

Overall, Tolleson said that, although we’re in unprecedented times, it doesn’t change the foundation of what his firm does.

“It's not changing the work we do necessarily, but it is changing how we do it,” he said. “I think constant communication is key.”

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