{"id":196510,"date":"2025-12-22T14:39:10","date_gmt":"2025-12-22T14:39:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/196510\/"},"modified":"2025-12-22T14:39:10","modified_gmt":"2025-12-22T14:39:10","slug":"how-advisors-are-investing-new-client-money-in-an-expensive-market","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/196510\/","title":{"rendered":"How advisors are investing new client money in an expensive market"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Advisors need to strike a balance between a possible near-term downturn and the regret of missing out on future gains.Natalya Kosarevich\/iStockPhoto \/ Getty Images<\/p>\n

Rising stock markets, rich valuations and the threat of a bear market that never seems to come are creating a conundrum for money managers: how to invest new client money. <\/p>\n

Whether it\u2019s an investor moving assets from another firm, an inheritance, or a big year-end bonus, advisors are grappling with how much new money to put into equities immediately and how much to leave in cash or even fixed income to protect it from a possible downturn. <\/p>\n

It\u2019s trickier when markets keep grinding higher as they have been since April, despite concerns about an artificial intelligence bubble and slowing economic growth. Both the S&P 500 and the S&P\/TSX Composite Index are up about 40 per cent from their lows in early April.<\/p>\n

\u201cTo see those kinds of gains is worrisome,\u201d says Rebecca Teltscher, portfolio manager at Newhaven Asset Management Inc. in Toronto. <\/p>\n

\u201cKnowing that every single stock you buy can go down is very difficult, but at the same time, you can\u2019t just be 100 per cent in cash all the time, because you don\u2019t know how long this bull market is going to last.\u201d<\/p>\n

Advisors need to strike a balance between a possible near-term downturn and the regret of missing out on future gains \u2013 even when the money is being invested for clients\u2019 long-term financial goals.<\/p>\n

Ms. Teltscher believes the safest way to invest new money is to average it in, regardless of market performance. <\/p>\n

\u201cIn a correction, we may move faster, but we wouldn\u2019t go all-in on Day 1,\u201d she says. \u201cSo, the pace of investments may change depending on where markets are, but the strategy of deploying cash over time remains consistent. It\u2019s almost impossible to time the top or the bottom of the market.\u201d<\/p>\n

A year ago, she says her firm would have initially invested about 40 per cent of a new client\u2019s money into the market. That dropped to about 25 to 30 per cent this fall, given the market run-up.<\/p>\n

Ms. Teltscher says her firm\u2019s goal is to buy stocks with reasonable valuations that it believes will perform well in the long term. <\/p>\n

\u201cI think valuation plays an important role,\u201d Ms. Teltscher says, noting that stocks with higher valuations tend to fall further in a correction, even if they\u2019re considered high-quality companies.<\/p>\n

Given her firm\u2019s focus on dividend-paying stocks, she also looks at dividend yield relative to cash yield, especially as interest rates have fallen. Today, she notes that money market funds yield just more than 2 per cent, while a stock such as Enbridge Inc. pays a 6-per-cent dividend yield.<\/p>\n

\u201cWe try to counsel our clients to focus on the income that comes into the account more than looking at stock prices,\u201d she says. \u201cStock prices will fluctuate in the short term, but the dividend income remains consistent.\u201d<\/p>\n

Reducing \u2018regret risk\u2019<\/p>\n

Brianne Gardner, senior wealth advisor and co-founder of Velocity Investment Partners at Raymond James Ltd. in Toronto and Vancouver, says her strategy is to invest about 25 per cent of new money immediately \u2013 even when markets are trading close to record highs \u2013 so it can grow if markets continue rising before potentially pulling back. <\/p>\n

\u201cWith new money, we\u2019re not always waiting for the perfect entry point because that rarely appears when we want it. So, investing in tranches helps to reduce that regret risk investors may have,\u201d Ms. Gardner says. <\/p>\n

The remaining cash is then deployed weeks or months later, depending on market conditions.<\/p>\n

\u201cWhen markets are fully priced, there\u2019s less margin for error,\u201d she says. \u201cSo, we focus on the companies with more durable earnings visibility, strong balance sheets and pricing power, and companies or stocks that are benefiting from long-term structural trends, not necessarily short-term momentum.\u201d <\/p>\n

And if the market \u2013 or a particular stock she likes \u2013 drops by five or 10 per cent, she\u2019ll speed up buying. If economic data signals a pending correction, she\u2019ll hold cash longer and own more fixed income, which she notes tends to do well in downturns \u2013 most of the time.<\/p>\n

\u201cOur job isn\u2019t to predict the next move. It\u2019s to manage risk, control entry points and protect our clients\u2019 capital,\u201d Ms. Gardner says.<\/p>\n

She expects markets to be more volatile in the first half of next year, but still sees overall gains. <\/p>\n

\u201cFor new clients coming to us, we\u2019re being patient on redeploying their capital and articulating that to them because we know how emotional money can be,\u201d she says.<\/p>\n

Her strategy is slightly different for clients who are transferring equities rather than cash, taking capital gains into account when selling to substitute them for other stocks.<\/p>\n

\u201cThe rebalancing can be a little bit faster because they\u2019re already in the market, but how we change up their allocation could be based more on the tax implications,\u201d she says.<\/p>\n

\u2018It\u2019s more about what you own than how much\u2019<\/p>\n

John Zechner, chairman and lead equity manager at Toronto-based J. Zechner Associates Inc., is a little bit more defensive with new money in the current market. <\/p>\n

\u201cThe stock market is a tough call right now,\u201d he says. \u201cYou need to have all of your hedges in place a little bit more.\u201d <\/p>\n

His defensive strategy includes dividend-paying stocks in sectors such as energy infrastructure (including pipelines, power and engineering companies) as well as a mix of long- and short-term bonds and gold. He\u2019s underweight in sectors such as energy and financial services that he believes could be more volatile in the near term.<\/p>\n

He\u2019s also adding new money slowly, targeting about 50 to 55 per cent in stocks, diversified across Canada and the U.S., and the rest in bonds and cash. <\/p>\n

Like others, Mr. Zechner believes it\u2019s important to put some of the new money to work immediately, as timing the market rarely works. <\/p>\n

\u201cLong-term money needs to be in the equity market. Don\u2019t try to get too cute about it,\u201d he says. \u201cIt\u2019s more about what you own than how much you have in there.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Advisors need to strike a balance between a possible near-term downturn and the…\n","protected":false},"author":2,"featured_media":196511,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[2571,138,246,15208,111,139,14485,69,244,245],"class_list":{"0":"post-196510","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-appwebview","9":"tag-business","10":"tag-finance","11":"tag-globe-advisor","12":"tag-new-zealand","13":"tag-newzealand","14":"tag-noastack","15":"tag-nz","16":"tag-personal-finance","17":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/196510","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=196510"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/196510\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/196511"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=196510"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=196510"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=196510"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}