This version of the article first appeared on CNBC’s Inside Wealth Newsletter. This is Robert Frank, our weekly guide to Net-Worth Investor and Consumer. Sign up to receive future editions directly in your inbox. Wealthy investors had the best trade over the past week. I’ve done very little. Many hedge funds and institutions have been selling for the past week, while wealthy private investors mostly sat tightly or bought a bit. Interviews with several top executives at Wealth Management suggest that unlike the 2020 or 2008 crash, they felt they had less pressure on sales over the past week. Some started buying on Friday afternoons. And many people used low prices as an opportunity to harvest weight loss and plan real estate. A wealthy advisor says that their clients are responding to the market roller coaster. John Matthews, head of UBS’s American private asset management, like most Americans, feels widespread sentiment from market and policy disruptions by wealthy investors. According to Mathews, they divide the political boundaries that shape the economic outlook and investment impulses. “Our job is to remove the emotions and try to set the levels,” Matthews said. “Most of the time, we are psychologists.” This allowed clients to avoid big deals and financial decisions based on their feelings about logic. Mathews said many UBS clients began trimming and “ricking” their inventory in January. With hope for the new Trump administration, the market was surged in the first two months of the year, but many of the wealthy people were selling cash to add it. Their large cash cushions helped calm them down during the turbulent markets over the past week, funding subsequent purchase opportunities. “Now there’s a lot of dry flour on the bystanders,” he said. “Some of our really wealthy clients were thinking (in January). “On a Friday afternoon, we saw a lot of shopping,” he said. “Clients were asking if they should buy punished individual stocks that they always wanted to enter. Mostly, wealthy clients have stopped trading and are waiting for more clarity in the policy and market. Others have added money to private equity, which means less day-to-day instability, but face challenges due to lack of IPOs and lack of liquidity. “The problem is the exit,” Matthews said. “How are you going to get an exit? Our wealthy clients have a 10 or 15 year vision to get their money back, so they aren’t too worried.” Gold is another big theme among wealthy investors. Though it has fallen from its highs over the past week, gold has been considered a safe haven even before the weekly market turnover. “We have a lot of questions about money,” Matthews said. “Everyone is interested in having gold as a hedge now,” Matthews said that one client summed up the broader dilemma for investors this week in a property analogy. “He said, ‘It seems I wanted to be $10 million and $8 million. ‘Three PS’ – don’t panic. Don’t predict, engage in planning. She said the Northern Trust ensures that clients have sufficient cash and other liquid holdings on hand when the market drops, so they don’t need to lose them and sell them. These so-called “portfolio reserves” can provide cash for spending when daily liquidity is required. “We’ve been telling them to plan volatility forever, and that’s inevitable,” she said. “They can pull from those risk-off assets to fund their lifestyle,” Lucina said her clients didn’t make a big move to buy last week. But she said she began to bring excessive liquidity to the market with clients who just sold their business. “Some of them are beginning to roll it out into stock,” she said. The main advice Northern Trust has given clients over the past week is to engage in real estate and tax planning, she said. Market slides created three major planning opportunities. First, lower asset prices will allow grantors to hold pension trusts or grats more attractive. Many clients had created or “freeze” glats while stocks were falling due to declining stocks when transferring wealth to their families. She also said that wealthier clients have converted Ross and are transferring funds from pre-tax retirement accounts to the Ross IRA. Conversion at low market prices allows investors to pay taxes on lower valuations and hedge the risk of higher tax rates in the future. Finally, she said that the client sells the lost harvest, or loser, and uses tax losses to offset the profits of the investments later in the year. “What we found is that when we can turn more conversations to the opportunity for planning, people feel more in control,” Lucina said. “We’re now less fear from our clients. Fleissig said the fear levels from our clients didn’t feel like 2000, 2008 or 2020. Family office clients, or more than $100 million, are “laying” into the market to buy them. The client was also interested in structured products. This can provide protection on the downsides, but it can provide powerful benefits. “In times like these, the ability for investors to find asymmetric opportunities, such as private markets and structured product opportunities that we are aiming for,” he said. One warning: Private credits. The offices of wealthy investors and families have been poured into private credit in recent years, leading to floods of capital chasing transactions, taking into account risks and returns too much. “I think a lot of private credit transactions are a very contract light,” Freisig said. Dmitriy Katsnelson, Wealthspire Katsnelson’s Deputy Chief Investment Bureau, said wealthy investors tend to hold more cash at the end of the first quarter for tax payments. This year, cash serves the additional purpose of buffering them from stock and bond losses. “The timing helped,” Katsnelson said. “And people are asking if this is a good time to start buying and become more aggressive,” he said, most investors across the wealth spectrum are eschewing major changes in their portfolios. However, a small number of investors, $2 or $3 million people, and those close to retirement felt more volatile than their super-rich clients. The later cohort invests more in alternatives, such as private equity and direct transactions, but this does not routinely determine prices. “People are ventilating mostly,” Katznelson said. “They are exposed directly and we’re there to listen.”
People pass the New York Stock Exchange (NYSE) in New York City. (Photo: Spencer Platt/Getty Images)
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This version of the article first appeared on CNBC’s Inside Wealth Newsletter. This is Robert Frank, our weekly guide to Net-Worth Investor and Consumer. Sign up to receive future editions directly in your inbox.
Wealthy investors had the best trade over the past week. I’ve done very little.
