Five Questions With: Melissa Trapp

MELISSA TRAPP is senior vice president and investment manager for Bank Rhode Island. / COURTESY BANK RHODE ISLAND
MELISSA TRAPP is senior vice president and investment manager for Bank Rhode Island. / COURTESY BANK RHODE ISLAND

Melissa Trapp is senior vice president and investment manager for Bank Rhode Island. With more than two decades of experience in the financial services industry, Trapp is responsible for investment services at the bank. She talks with Providence Business News about the investment market, the Trump effect and how age changes how one should think about investing.

PBN: How would you describe the overall investment market right now?

TRAPP: Looking at available measurements, we see the outlook for the markets to be higher than they are today over the next 18-24 months. For the week ending Jan. 27, 2017, all three major U.S. averages reached record highs. That said, in the immediate short-term, we expect some volatility as consumers and corporations digest the policy announcements coming out of Washington and how those will impact their earnings and investment potential.

PBN: What’s your take on the post-election, year-end run and how do you expect that to change or stay the same after the new administration continues to take over?

TRAPP: In late January, the Dow Jones Industrial Average topped 20,000 for the first time ever, adding to one of the longest bull-market runs in history. And on Jan. 28, Barron’s ran a front page headline that read, “Next Stop, Dow 30,000.” So, there’s some obvious enthusiasm in the market for a Republican House and Senate, which, in theory, could mean less regulation, larger tax cuts and increased spending on infrastructure. But in the short-term, there is still a lot of information for the markets to absorb in 2017. We will have to see if the positive policies outweigh what the market considers negative policy changes, but most importantly, we need to see what actually gets implemented. I do feel strongly that it is crucial to the health of people’s long-term retirement plans that they not get overly concerned with fluctuation in either direction – that they trust and stay true to their investment strategies.

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PBN: As we approach tax and IRA season, there’s still time to make an IRA contribution for last year’s tax purposes – what do people need to know?

TRAPP: The most important thing people need to know is that they have until April 18, 2017 to make an IRA contribution into a qualified plan for the 2016 tax year. Consumers also need to be aware of the Department of Labor Conflict of Interest Rule, which will potentially impact how many IRA clients pay for their investment guidance after April 2017. With a new administration in place, there is also some talk about a delay or possible repeal of this legislation, which could lead to some confusion as we approach April. At BankRI Investment Services, we are moving to comply with the legislation as it currently stands.

PBN: With more than half of U.S. households at risk of running low on money during retirement, how should people better manage their 401(k) in today’s market to ensure post-employment fiscal stability?

TRAPP: The first step to ensuring fiscal stability in retirement is to create a game plan today – your future self will thank you. And once you have that game plan, it’s important to stick to it as closely as possible. Choose a diversified, well-balanced portfolio, maximize any company match available to you, and let the power of dollar cost averaging work for you, especially during times of market uncertainty. Be sure to review your portfolio periodically with your financial adviser to ensure your asset allocation still aligns with overall goals and risk tolerance. If your asset allocation has fallen out of alignment with your original intentions, consider account re-balancing. Stay informed by taking advantage of educational materials and employer-sponsored financial workshops, and consider auto-increasing each year if your plan offers that option. Many times, the 3 percent cost of living increase some employees receive annually would be better served redirected into their 401(k) plan. They’re pre-tax dollars and in addition could benefit from an employer match. These simple steps will get you closer to your long-term goals than paying attention to daily market noise.

PBN: How does that strategy change based on age?

TRAPP: Well, first and foremost, it’s never too soon to start saving in the form of a 401(k) plan. When you are younger, it is reasonable to be more aggressive with your portfolio; however, a well-diversified and balanced portfolio should benefit most at any age. It’s also key to not get derailed during your 30s and 40s when there are a lot of important priorities fighting for your paycheck. During your 50s and 60s, it’s important to work with an investment professional you trust to determine your entire financial picture, and when you plan on utilizing your 401(k) to generate post-retirement income.

BankRI Investment Services are located at One Turks Head Place, 16th floor, Providence, RI, 02903. Melissa Trapp may be reached at (401) 574-1530. Securities and Advisory Services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser.

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