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Financial planners give some optimistic advice

Most signs point toward optimism for this year’s economic outlook. Two experienced financial planners, Dudley Barnes of Clarksdale and Danny Williams of Jackson, are giving positive advice to their clients.

“People are much more upbeat than they were,” Barnes said, “but they are still skeptical of financial markets because of what happened in 2008 and the fraud and greed. The mistrust of financial markets has not gone away.”

Barnes, who heads the Barnes-Petty Raymond James firm with offices in Clarksdale, Grenada, Jackson and Memphis, says he must know a person’s financial situation before giving investing advice. “Every bit of advice is predicated on a client’s finances, goals and risks they’re willing to take,” he said. “Are they trying to grow their money or receive dividends?”

Williams, a partner in Woodridge Capital, said, “Most of our investors and others that I have come in contact with recently seem to be positive about the markets and the overall economy. Those that have been in the market have enjoyed the continued stock market rebound during 2010, and are optimistic this will flow over into other areas of the economy. We need to remember that our economic difficulties took years to create and very likely will take years to see some of these difficult areas rebound to pre-recession levels.”

His firm primarily sees clients who are mostly interested in Woodridge Capital providing them with a disciplined portfolio management process. Many of those clients are working with other competent professionals, including certified public accountants, estate planning attorneys and insurance specialists.

“These professionals are important in having a complete financial plan in place,” he said. “Our approach is to work as a team to accomplish their overall financial goals.”

Barnes, who’s been a financial planner for 35 years, explains the following broad themes his firm considers before advising clients: the economies of the world are going to grow faster than the U.S. economy; there will continue to be a scarcity of natural resources; technology will continue to expand; U.S. companies that can operate in a global economy will do better than those that can not; and the bond market will be much more difficult – not as profitable — in the next 10 years than it has been.

“All clients need to have more stock and bond money outside the U.S. than in previous years,” he added. “With the natural resources scarcity, clients need some kind of ownership in natural resource companies. We want everyone to have a strong, defensive portfolio. There are so many ‘what ifs’ out there whether a client is conservative or aggressive.”

That said, Barnes believes the U.S. economy is better than he and others thought it would be and is more enthused for 2011 than he thought he would be.

“The GDP of foreign countries makes us want some money in those countries to reflect that growth,” he said. “We certainly need to be aware of what’s going on.”

Williams generally advises clients to take time periodically to meet with their professional financial advisors to gain a better understanding of the current situation. “Those are times to discuss any needed adjustments,” he said. “Our lives seem to get more hectic by the year, and it’s easy to push personal planning and financial matters off to the side. Most people work hard to earn their investment dollars so they need to take time to get a financial checkup just as they should go to see their doctor each year.”

More specifically, Williams advises clients to confirm that their investment plans are disciplined and rules based so they will determine what and when to invest as well as when investments need to be sold. “Considering recent market declines that have taken many years to recover – in some cases over seven years – it is extremely important to have a strategy when markets go down,” he said. “Other areas to review are beneficiary information on 401(k) plans and insurance policies as well as maximizing retirement plan contributions.”

He points out that more than $600 billion has been invested in bond funds over the past two years, more than triple that of any two-year period. “This has been done while interest rates have been at historical lows,” he said. “Many investors feel there is safety in these type investments, but we are cautioning them about how these investment values may decline dramatically with even a slight rise in interest rates.”

On the subject of bonds, Barnes says he’s much more careful about the bonds he recommends. “From an interest rate standpoint, we recommend shorter term bonds, corporate bonds, foreign bonds and bonds with variable rates rather than fixed rates. That theme will affect how every portfolio looks.”


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