In partnership with Shannon Sparks
Elliot Kallen, wealth manager and winner of the Five Star Wealth Management Award
Since the turn of the decade, Americans have dealt with economic uncertainty due to an onslaught of factors: the Covid-19 pandemic, worldwide inflation, international conflicts with global ramifications, high gas prices, and predictions of an impending recession. For many, these stressors can make financial goals like retirement and college planning feel uncertain or unattainable.
But Elliot Kallen, president of Prosperity Financial Group—which won the Worldwide Finance Award for Most Trusted Asset Management Company in Northern California—says he’s seen a thing or two over the years as a wealth manager and has advice to help people prepare for the future. WIth the benefit of hindsight from past downturns and setbacks, he says five key things can mitigate damage and ensure recovery once the economic storm subsides.
1. Assess Spending and Saving Habits
Kallen, who won the Five Star Wealth Management award in 2020, believes it’s important to examine how much you spend and save when the economy is doing well; this makes it easier to adjust and adapt quickly when it isn’t.
“In 2023, it’s more essential than ever to understand exactly where your money is going,” he says. “Start by reviewing your savings or debt payoff goals, then develop a spending plan around those goals.”
He recommends asking pointed questions like, “What would happen to my finances if I was out of work tomorrow?”, “Am I regularly over or under my monthly spending budget?” and “Do I dip into my emergency funds more than I should?” By knowing the answers to these questions, he says, people give themselves a better idea of where they’ll stand financially during a downturn, which offers some advance warning to curb harmful financial habits and cultivate healthier ones.
2. Brace for Impact Calmly and Wisely
No matter how good you are with money, it may not matter during a recession, Kallen notes. A sharp, sustained economic downturn can eat away at retirement savings and negatively impact your portfolio, but there are ways to lessen the blow by protecting yourself in advance.
Investing in flexible retirement annuities can convert a portion of retirement savings into a stream of guaranteed lifetime income payments, protecting your principal from market losses, he explains. It may also be wise to add a Cost-Of-Living Rider (COLA Rider) to your annuity to protect yourself from inflation.
3. Maximize Employer 401K Match
Kallen, named one of the Top 300 Advisors to the Defined Contribution 401(k) Industry, recommends making the most you can out of your company’s 401K benefit plan. He advises making sure you contribute enough to have your employer maximize their 401K match. If you aren’t contributing enough, he stresses, that means you’re missing out on free money.
Before maximizing your contribution, he says it’s paramount to make sure you’ve paid off high-interest credit card debts, obtained an adequate health insurance policy, and built up an emergency fund with six months’ worth of living expenses.
4. Constantly Rebalance Portfolios
Early on in the pandemic, Kallen helped his clients survive the volatility of the stock market by tweaking portfolios on a weekly basis, keeping an eye out for investments that would still make money.
“This constant, vigilant rebalancing of portfolios allowed many clients to lessen the extent of damage from economic happenings outside of our control,” he recalls. “In regard to active portfolio management, ‘What worked yesterday may not work tomorrow’ is an important precept we follow.”
5. Earn Trust and Keep It
Finally, Kallen says that being a person of good character is an overlooked but important element of weathering an economic storm.
“It’s all about the people,” he says. “Of course, you need to be confident, a great learner, and a great teacher. Those things are a given, but you can’t replace the fact that if people trust you and like you they will do business with you. If I make you 40 percent this year but you don’t trust me, you leave me. If you lost 20 percent this year and trust me, you stay.” This fact of life, he believes, translates into personal and professional interactions alike: in order to trust and rely on others, it’s imperative to be a person others can trust and rely on as well.
Kallen’s success as a wealth management professional and experience dealing with volatile economic periods make him a trusted source of knowledge in personal finance. On February 1, he hosts the Health & Wealth Educational Dinner Event with Dr. Bill Lloyd, National Health Director for Transamerica, considered an authority on the subjects of health, wealth and pandemic recovery. The event is followed by the Prosperity Power Hour Networking Event on February 2, a financial networking event for professionals, business owners and entrepreneurs.
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