Five Questions With: Malcolm A. Makin

Malcolm A. Makin, of Raymond James in Westerly, again has been named the state’s top financial adviser in Barron’s 2016 Top 1,200 Financial Advisors list.
Malcolm A. Makin, of Raymond James in Westerly, again has been named the state’s top financial adviser in Barron’s 2016 Top 1,200 Financial Advisors list.

Malcolm A. Makin, of Raymond James in Westerly, again has been named the state’s top financial adviser in Barron’s 2016 Top 1,200 Financial Advisors list. He talks with Providence Business News about his investment strategy, the regional, national and global economy, and how the national election cycle is affecting the markets.
PBN: Congratulations on being named Rhode Island’s top financial adviser by Barron’s. How does it feel once again to receive this type of recognition?
MAKIN:
It feels great. Thank you. I’ve been doing this kind of work for a long time now and have been able to develop a team of outstanding people that work with me. This is as much for my team as it is for me.
PBN: What about your services is unique and sets you apart from the competition?
MAKIN:
There has been a lot of angst in the investment management community in recent months over the new proposed rules from the Department of Labor. These new rules may require advisers to act as fiduciaries particularly regarding retirement-type accounts. That means that for clients with 401(k) plans, IRAs, Roth IRAs, pensions, etc., the adviser will be legally required to put the clients’ best interests ahead of his or her own. My team and I have been doing that for years. Professional Planning Group is an independent Registered Investment Advisor. We have been affiliated with Raymond James since 1989 as an independent RIA. We have full access to their platform and the wealth of knowledge and expertise that RJ has available, but we remain an independent firm. We have access to a variety of outstanding programs that may benefit our clients but we are independent. We can make our own choices based on what we think is of greatest benefit to the clients that we serve. In many adviser-client relationships, the firm is the employer, the adviser is the employee and the client is the customer. In our situation, our client is the employer, we are the employee and Raymond James is our business partner. Our clients come first. I should add that since we work as a team, our clients have access to an incredible assortment of educational degrees, professional certifications, experience, knowledge and backup. It’s impressive.
PBN: What positive and negative signs are you seeing in the economy right now and how is that affecting invested wealth?
MAKIN:
It’s a tough market that has basically been going sideways for over two years now. The volatility is difficult for many investors to handle. I think that we will probably see more of the same going into the summer and fall, especially as we get closer to the national election. Markets don’t like change and the prospects of either a [Donald] Trump or [Hilary] Clinton presidency may be difficult at first. On the other hand, if one or both candidates can clarify their intentions, especially in regards to taxes, the federal deficit and entitlements, the equity markets may respond positively.

PBN: Given the state of the global economy, do you think the Fed should increase interest rates again – or more than once – this year? Why or why not?
MAKIN:
I think the United States economy is OK, not great. It is getting stronger, however. Parts of Europe are getting stronger as well. Remember that what we call “the economy” is really about money in motion. It represents what we spend as consumers, what corporations spend, what the government spends and what we export. I think that southern New England is struggling more than other parts of the country. I’ve spent some time in Jupiter, Fla., this winter and things are very different there. There is a lot of building going on. Home sales are strong. Marinas are full of boats. Restaurants are full of people. We only have to look at the increased number of people traveling through airports around the country to see that we are spending more. It’s not healthy for interest rates to be flat for an extended period of time. Investors, savers and particularly retirees suffer when rates are so low. Having said all of that, I’m not sure whether the Fed should raise rates again this year or not. My gut says, “yes,” raise rates 25 basis points over the summer, but who knows? What I am sure of is that the Fed has to develop a clear policy, communicate it well and stick to it. I think part of the problem over the past two years is that the Fed, and particularly [Chair] Janet Yellen have come across as indecisive and appear not to have a clear strategy. That gives the impression that they don’t trust the economy to be strong enough to withstand higher rates. That makes people, corporations and, especially investors, very nervous.
PBN: How is this election cycle affecting the market and what do investors stand to lose and/or gain once it’s all over?
MAKIN:
I spoke earlier about the need for clarity. Markets hate uncertainty. So part of what needs to happen as we move through and then past the election process is for both candidates to be as clear as possible about what their intentions are if they are elected. I had the opportunity to spend a few days in Washington earlier this year and was with a small group that spent some time with Alan Greenspan. I remember him saying that in 1965, GDP was about 5 percent and entitlements were about 5 percent of GDP. Today, GDP is less than 2 percent and entitlements are roughly 15 percent. He also said that current spending on defense is one of the lowest percentages of GDP ever. Something has to change. We could not run our household budgets like that. We certainly can’t continue to run our country like that. There is very low inflation, at least as the federal government measures it. That seems unusual because I don’t see prices in the grocery store going down or even staying the same. They continue to rise. The exception, of course, is energy. Who would ever have imagined that we would be paying slightly more than $2 a gallon for gasoline? Unfortunately the decline in the price of oil has had a direct impact on the stock market. I think that if oil stays low, which I believe it will, consumers will have more money to spend and they will spend it. That is good for the economy. This is a time when you want to be sure that what investors own in their portfolios are good, solid stable investments. We have stepped away from high-yield bonds because the increased yield does not reflect the increased risk. We want to own companies whether in individual names or well-managed mutual funds or ETFs that are strong. We want companies that have a strong business model, that are well-run, have good products, good revenue, reasonable debt and can withstand whatever volatility there may be. Having said that, I don’t think we are on the verge of another recession, although we could certainly talk ourselves into one. I think that growth will be modest for the foreseeable future but there will be growth. The bottom line in this election cycle is that we need to decide what kind of a country we want to be going forward, how we are going to pay our bills and how we can stimulate investment, reward entrepreneurship and move our economy forward.

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