Wall Street Journal

What We've Learned About Target-Date Funds, 10 Years Later

Patrick R. McDowell, CFP®, AIF® was quoted in a Wall Street Journal article by Jeff Brown discussing target date funds.

Back in 2008, many investors looking ahead to retirement in two years had a shock when “target-date funds” designed for them plummeted in value. Many had assumed those funds, targeted to a 2010 retirement, were safe from large moves that late in the game.

Another concern: The automatic investing strategy ignores changing conditions. Patrick R. McDowell, investment analyst at Arbor Wealth Management in Miramar Beach, Fla., says low bond yields in recent years have reduced TDF income after the target date, and increased the risk of losses on bond holdings if rates rise. (Higher rates hurt bond values because investors favor newer bonds that pay more.)

What’s more, he says, stocks and bonds have often moved in tandem in recent years, reducing the benefit from diversification, which assumes one asset goes up when the other falls.

Retirement savers who are automatically put into TDFs have the right to switch to other funds in their retirement plan as they learn more or conditions change, and Mr. McDowell recommends that investors get more involved as retirement nears. He says he often recommends investors nearing retirement leave the target-date fund and buy a mix of stock and stable-value funds—which contain bonds insured against loss and are designed to preserve capital while generating returns similar to a fixed-income investment—to reduce danger from a potential market plunge.

Burned Out Advisers No Help to Clients

Patrick R. McDowell, CFP®, AIF® was quoted in a Wall Street Journal article by Veronica Dagher discussing different tactics to prevent advisor burnout.

One good habit that therapists recommend: Think regularly and consciously about why you are in the advising business.

Patrick McDowell, an adviser in Miramar Beach, Fla., uses a version of this tactic when he starts to feel the burn. He leafs through photographs of his clients on his customer-relationship management software. “When I actually see the faces of the people I’m trying to help, it brings me back to why I do it,” he says. His firm, Arbor Wealth Management, manages about $110 million in client assets.

Rethinking Apple: Growth Stock, Value Play—Or Both?

Patrick R. McDowell, CFP®, AIF® was quoted in a Wall Street Journal article by Brett Arends discussing Apple stock.

Many people still think of Apple as an exciting "growth" stock, promising hockey-stick returns. They're wrong. These days the company is better viewed as a so-called value stock—a slightly dull one that should be owned for the cash flow and dividends it generates, much like, say, a Johnson & Johnson.

Patrick McDowell, a portfolio manager at Arbor Wealth Management, which is based in Miramar Beach, Fla., and has $55 million under management, says the firm began buying Apple stock this week as a value investment for some clients based on the income. "When you look at the fundamentals of Apple, we see it as an incredible value buy," he says.