We caught up with Michael J. Mattie of Doylestown Wealth Management after a recent seminar at his office. His message is a mix of education, comments on Federal Reserve actions (a favorite topic) and information on how he prefers to invest in today’s markets. Most of his clients are in or approaching retirement, and most are not interested in aggressive investments using a high percentage of stocks. Many are risk averse, who want modest growth from their retirement assets, and education about potential effects of a significant downturn, should another drop in stocks embrace the markets again.
His message is reassuring to them, even if another significant downturn doesn’t appear for years.
After spending seven years in the USMC as a pilot, rising to the rank of captain, Michael spent the last 23 years as a financial advisor, many with a large national investment firm, and the past seven years with the largest independent firm in America, LPL Financial1. After providing guidance to clients through the roaring ’90s, when stock returns were abundant, and also the past two downturns, Michael believes his conservative income strategy will serve his clients best in the coming years.
Federal Reserve actions and robust stock market gains have a lot to do with his thinking.
“In my opinion, the Federal Reserve is largely responsible for the five-year rebound in stocks,” he says. “Their QE (Quantitative Easing) programs, QE1, QE2, QE3+, Operation Twist, etc., have pumped more money into the economy than ever before … and now they appear to be ending. Is the economy strong enough to stand alone, without the Fed’s help? Perhaps. But I prefer to employ a combination of strategies to target modest growth in client accounts, with an eye towards understanding risk tolerance and a focus on strong dividends.”
Michael’s investment themes stress diversification2, combining traditional investments with those not typically in-sync with the stock market. These include:
* A strong focus on dividend investments, from large company stocks and certain bond investments. 3
* Expanding investments to include alternative investment strategies, again with a dividend focus. Michael likes the energy infrastructure sector, health care and utilities. Utilizing an option strategy may also be suitable.4
* For those without a company pension plan, he has specific ways to create a “personal income plan” for a portion of a portfolio, to provide a plan for income in retirement.
His goal is to smooth out the extreme ups and downs for clients and rely on dividends from a variety of sources to supplement income.
When asked, Michael will point to the Federal Reserve action over the past six years as the primary driver of stock market growth. While he does not want to “fight the Fed,” he is concerned that the Federal Reserve’s effect on the stock market may be waning, hence his shift to a conservative, dividend-focused strategy.
“Over the past six years, the Fed’s balance sheet has expanded from $800 billion to well over $4 trillion,” he says. “The economy has not responded with explosive growth, like it has after previous recessions. What happens when the Fed finally stops supporting the economy with their QE programs, and eventually raises rates?”
His answer is a mix of concern and faith that the economy will eventually find its footing and grow with confidence. While we wait to find out, he is very clear on his strategy: dividends, diversification and a very watchful eye.
Michael draws resources from LPL Financial, the nation’s largest independent broker-dealer, and Great Valley Advisor Group, which maintains a relationship with LPL and provides critical assistance to Michael and his Doylestown team.
These relationships and his research allow him access to investments managed by some of the most experienced managers in their field. These include Blackstone/GSO through their affiliation with Franklin Square. GSO is recognized as one of the world’s largest credit-oriented alternative asset managers, with more than $69 billion of assets under management.5 Strategies they offer allow Michael access to dividend investments for certain clients as part of his expanded allocation approach.
As Michael closes the door on his seminar room, we are reminded of his final refrain to those new to his message.
“For those in or approaching retirement, your best earning years are probably behind you,” he says. “You come to me with your retirement savings and expect a plan to live off some or most of your investments. A second opinion is always a good idea, especially one that offers a goal of reduced risk/reward and a dividend focus. Let’s get together and see if our approach helps restore your confidence in the future.”
If you agree that a second opinion makes sense, contact Michael at:
Michael J. Mattie
Doylestown Wealth Management
165 West Ashland Street
Doylestown, PA 18901
267-864-2000
www.dwmwealth.com
Photograph by Allure West Studios
No strategy assures success or protects against loss. Investing involves risk including loss of principal. This is not a recommendation to buy or sell. Contact our office to determine how this information applies to your specific financial situation. Securities offered through LPL Financial. Member FINRA/SIPC. LPL is a separate entity from Great Valley Advisor Group, Franklin Square, and Blackstone/GSO.
1. As reported by Financial Planning magazine, June 1996-2013, based on total revenue.
2. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
3. The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.
4. Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
5. Reported by Blackstone/GSO as of June 30, 2014. www.blackstone.com/businesses/aam/credit-(gso)
