The experience is a critical one, said Andrew Martzloff, a partner and managing director at Bitterroot Capital Advisors, a wealth management firm based in Bozeman, Montana.
"Clients need to be thinking about spending in light of investment returns," Martzloff
said. Fueled by the belief that investors of all ages have entered "an extended, very challenging investment period," Martzloff
partners are advising their high-net-worth clients - people with $100 million and more - to start by developing a sound asset allocation plan. "This means not only deciding on proportions of stocks, bonds and other investments to hold, but also to view the execution of that plan as a significant source of investment returns," Martzloff
As an example, Martzloff
noted: "In the last five years, if you owned value stocks you would have done very well and if you had owned growth stocks, you would have lost significantly between 2001 and 2003.The difference between the two asset categories was a 100 points." For clients with a limited risk budget, Martzloff
advises falling back on low-fee, tax-efficient index funds which, though generally not available through most retirement plans, generally "beat active management, until proven otherwise."