How a San Antonio Financial Advisor Can Help Secure Your Assets

Amid volatile markets, the role of a financial advisor in San Antonio becomes increasingly crucial when they help their clients safeguard their assets. These advisors can play a vital role in helping their clients navigate the uncertainties of an up-and-down financial landscape.

Financial advisors closely monitor market trends and employ tactical asset allocation techniques to adapt to changing market conditions. By implementing sophisticated risk management strategies, they can help their clients reduce downside risk while still seeking to produce positive rates of return now or in the future.

This article will delve deeper into PAX Financial Group’s financial advisors’ specific tactics in San Antonio to protect their clients’ assets during volatile markets. We will also highlight the significance of diversification and other proactive approaches to minimize losses and achieve long-term financial goals.

We will cover the following seven important topics in this article:

  • Why are the securities markets as volatile as they are?
  • What is the critical difference between risk capacity and risk tolerance?
  • Why is diversification your number one risk management strategy?
  • What is rebalancing, and why does it work in volatile markets?
  • Why is a down market a major buying opportunity?
  • Why do financial advisors conduct scheduled portfolio reviews?
  • Why select a financial fiduciary advisor in San Antonio?

Read our latest Quick Guide: “How to Choose the Right Financial Advisor in San Antonio.” 

Why are the securities markets as volatile as they are?

What do the historical records of the securities markets tell us?

Securities markets are volatile due to economic indicators, geopolitical events, company news, earnings reports, business trends, and investor sentiment. 

They reflect the aggregated predictions of future events by all market participants. Historical records show that despite short-term volatility, securities markets have generally increased in value over longer periods. 

Historical records also illustrate that periods of significant downturns, or “bear markets”, are typically linked to larger economic events. Ultimately, the records demonstrate a cyclical nature, highlighting the interplay between risk and reward.

What is the critical difference between risk capacity and risk tolerance?

An investor’s capacity to take risks may be a measurement of time. For example, an investor is 40 and plans to work until age 65, so this person has 25 years until there is a need for income or principal. Therefore, in this case, the capacity to take investment risks is quite high due to the long investment horizon.

On the other hand, this same investor’s psychological pre-disposition (tolerance) for taking risks could be relatively low. Stock market volatility keeps this person awake at night worrying, so their risk tolerance is relatively low.

A financial advisor in San Antonio should be able to discern the difference between an investor’s capacity and tolerance for risk and provide the appropriate advice. 

Why is diversification your number one risk management strategy?

One key investment strategy employed by financial advisors is diversification. This strategy is as simple as the old saying: “Don’t put all your eggs in one basket.” If that one basket goes down in value, the decline impacts all of your assets.

On the other hand, if your eggs are in multiple baskets, you have twin hopes:

  • All of your assets do not go down in value simultaneously.
  • Some assets go up in value when others go down in value.

Three examples of diversification include:

  • Domestic and international investments
  • Stocks, bonds, and cash equivalents
  • Alternative investments – for example, real estate

By spreading investments across various asset classes, such as stocks, bonds, and alternative investments, financial advisors in San Antonio can minimize the impact of market volatility on any one asset class. 

Based on thorough research, financial advisors can identify opportunities to allocate assets to balance risk and potential returns, thereby helping clients shield their assets from excessive volatility.

What is rebalancing, and why does it work in volatile markets?

Suppose your initial portfolio allocation is 60% stocks and 40% bonds. You selected this initial asset allocation because it is consistent with your capacity and tolerance for risk. Then over time, your stock investments outperform your bond investments, so your current asset allocation is 75% stocks and 25% bonds. The opposite can also be true.  

For example, a financial advisor in San Antonio may recommend rebalancing your portfolio to the original 60%/40% allocation because it is more consistent with your risk tolerance.

This rebalancing process works for three reasons:

  • It requires you to sell a portion of your appreciated stock holdings (take gains).
  • It requires you to sell losers that have declined in value (realize losses).
  • The cash proceeds of the sales can create a substantial buying reserve.

Why is a down market a buying opportunity?

Down markets can impact great, mediocre, and poorly run companies. This can be an opportunity to buy great companies at a discounted price.

Your financial advisor’s research capabilities can help you determine if a great company is still great. Perhaps its problems will impact its future earnings after the markets have recovered. So, you and your financial advisor must do your homework. But, there is a chance you can acquire the stock of a great company for a lower price.

Why do financial advisors conduct scheduled portfolio reviews?

You should be kept in the loop based on regularly scheduled portfolio reviews that increase in frequency and depth in down markets.

Nothing is worse than being kept in the dark while your portfolio is declining in value. Ideally, your financial advisor should be a strong communicator with you, especially during volatile markets. 

Why select a financial advisor in San Antonio?

You have every right to be nervous during periods of stock market volatility. Therefore, during volatile times, you should pursue conflict-free financial advice through the services of a San Antonio financial advisory firm. 

About PAX Financial: The PAX Financial team helps you prepare to handle unexpected changes that life may throw at you. We create a personalized financial blueprint for you and assist in its implementation. A comprehensive financial plan helps you pursue your life goals while also addressing potential roadblocks that may arise on your financial journey.  

At PAX, we value more than the mere figures in your statement. We recognize the significance of your investments and finances as crucial components of your life, and we also understand that the broader spectrum of your life is equally important. Ultimately, it goes beyond accumulating substantial numbers; we aim to assist you in pursuing your life objectives, surpassing just the monetary metrics. We invite you to connect with us to learn more about our planning and investment philosophy. 

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing(“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology.Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.

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