How smart investments prepare clients for inflation

By Ryan De La Torre

A recent survey from MDRT, The Premier Association of Financial Professionals®, discovered that 80% of American consumers are at least slightly concerned about the onset of a recession. How do you know if your client has enough savings to outpace rising costs?

We don’t want to push anyone beyond their comfort level, but in some cases, a strong investment portfolio is one of the best ways to grow and preserve their purchasing power and wealth amidst market fluctuations.

Building investments aligned with long-term goals including inflation mitigation requires finding clients with risk tolerance to ride the waves of market adjustments. Developing moderately aggressive investment portfolios based on extensive research helps maintain the client’s lifestyle and increases your value as their financial consultant.

Finding the right fit

An important lesson from my career has been that I am not the right wealth manager for everyone. I’m able to best serve clients who are open to thinking outside the box and examine research to see the best option forward.

As we work through education, the client ultimately can trust me like the captain of a ship, knowing the why behind my decisions and trusting they will benefit in the long term. Before I start making adjustments to a client’s portfolio, I ensure clients understand that volatility is part of the process.

Not every prospect has a financial situation or mindset where these investment strategies are their best option. For example, someone just starting their career likely doesn’t have the capital for a full investment portfolio. This is why I take time to get deeply understand my clients. Here are some qualities that I look for:

• Has funds available for investment
• Is interested in learning more about finance and investments
• Has moderately high risk-tolerance, understands that there will be ups and downs
• Has a desire to grow their wealth to meet future needs and guard against inflation

The markets are constantly changing, and there will always be highs and lows. I do my best work with clients who understand these fluctuations and trust that I will lead them through the rough waters we may experience along the way. By defining the qualities early on, it helps me identify like-minded clients who are best positioned for success.

Key to potential investment success

Crafting an investment portfolio is not a simple task. Many advisors avoid managing investments themselves and defer to outsourcing the work to investment brokers. Maintaining the portfolio yourself requires a deep knowledge of investment strategies and a willingness to think beyond the most popular stocks.

To keep myself agile and well-informed, I perform extensive research into markets by covering all the mainstream market information to start; then, I go to the less traveled roads. My goal is to gather as many perspectives as possible so that I can get a sense of how the current world could impact markets beyond the “obvious” moves.

After over 20 years, I’ve learned that research doesn’t stop at good enough. Dissecting this data and cross-referencing with other sources makes me confident when taking action that aligns with my client’s long-term goals.

Rather than growing excess, I see portfolio growth through investments as a way for my clients to grow and preserve their purchasing power over time. To help achieve this, where appropriate, I encourage my clients to consider investing in physical commodities like gold and silver, as well as keeping the securitized versions, like gold and silver stocks, in their portfolio.

Increased allocation of securitized commodities, like precious metals, agriculture, real estate, base metals etc., can sometimes lead to their portfolio being considered moderately aggressive, due to asset classification.

A strategy like this can provide opportunity for growth over time while relying on assets, like gold, that have years of retained value. Leveraging these investments can promote capital growth to help the client hedge against inflation.

With this strategy, despite expected rises in inflation and the overall cost of living, clients can maintain their current lifestyle as their funds have grown on pace with the higher costs. Just as with retirement planning, we want to ensure that their lifestyle will not change as the years continue and rising costs diminish their funds. This framing clarifies to my clients that while it can be difficult to take risks, they can trust me to find the best way to protect their future through my expertise.

No one is perfect – there are times when a strategy doesn't work. By guiding your clients into the why behind your decisions, you can illustrate the long-term value and grow their confidence in you as their financial advisor during the highs and lows.

This is why it’s so important to identify clients with traits that align with your style of financial planning. As you demonstrate how investments help them achieve their goals, you can build trust and capital to help them retain their purchasing power.

About the MDRT member
Ryan De La Torre, CFP, CLTC is a financial advisor and owner of De La Torre Financial Group. Through his personalized Retirement Framework and custom-tailored portfolios, he guides clients in defining their goals, navigating financial complexity, and making informed decisions across every stage of life. De La Torre is a 14-year MDRT member with five years as a Top of the Table member.