Five Questions With: Paula Murphy

PAULA MURPHY is director of portfolio management at Rockland Trust. / COURTESY ROCKLAND TRUST
PAULA MURPHY is director of portfolio management at Rockland Trust. / COURTESY ROCKLAND TRUST

Paula Murphy is the director of portfolio management at Rockland Trust. She talks with Providence Business News about how different demographics should think about investing, the increased interest in passive investing and how the recent election might impact the markets moving forward.
PBN: Can you tell our readers about your new position and responsibilities?
MURPHY:
As the director of portfolio management at Rockland Trust, I lead the portfolio management teams in Providence, Boston, Franklin, Osterville and Hanover. Our group is responsible for managing $2.9 billion in assets for high net-worth individuals and institutions. Our primary role as portfolio managers is to design portfolios that are tailored to meet the specific goals and objectives of each client. We start by establishing an appropriate asset allocation based on risk tolerance, time horizon, tax issues and liquidity needs. Next, we construct a portfolio using well-diversified, high-quality assets. We believe that protecting and building wealth is achieved by adopting a disciplined, holistic wealth management program focused on minimizing risk through broad diversification.
PBN: What unique issues and solutions face Rhode Islanders who’re looking to retire and how does that differ – or stay the same – when considering gender?
MURPHY:
Rhode Islanders have many of the same retirement concerns as the rest of the country. We are living longer and healthier than past generations and plan to be active in retirement. According to AARP, four out of 10 baby boomers plan for some type of employment in their retirement years. The Rhode Island economy is characterized by a large number of small companies, many of which are in the health care and service sector, with part-time employment opportunities. Women have a higher life expectancy than men and are more likely to spend time out of the workforce. In addition, the wage gap between women and men still exists. For these reasons, it is imperative that women plan for retirement and accurately define their goals and objectives. Given their need for funds to last longer, it is crucial that their portfolios are designed to withstand numerous threats like inflation, interest rate, credit, liquidity and reinvestment risk.
PBN: How about age? Are young people thinking about investing as a means to retire? Why or why not?
MURPHY:
Due to the rarity of pension plans, millennials realize that saving for retirement needs to be a priority in their financial planning. The availability of 401(k) and 403(b) plans and the automatic enrollment that most companies employ has made this easier. We speak with 401(k) participants on a regular basis about the benefits of starting early. An employee who contributes $5,000 annually for 10 years starting at age 25 will amass more wealth at age 67 than one who contributes the same amount for 32 years starting at age 35.
PBN: Are there any unique trends you’ve noticed as of late that are impacting the way people are managing their investments?
MURPHY:
We have seen an increasing interest in passive investing, specifically indexing to asset classes through the use of exchange traded funds. Although ETFs are more than 20 years old, they have become popular recently. We often see investors and advisers moving money into what has worked well lately and indexing has worked well. Interestingly, the average return realized by an investor is only about 60 percent of the investment’s return due to emotion and an attempt to time the market. At Rockland Trust, we prefer to take a long-term view by using active management and a strict re-balancing process. This realignment of portfolio assets allows us to minimize the risk of the portfolio while focusing on the client’s objectives.
PBN: How have the election results impacted how people are thinking about the future?
MURPHY:
The outcome of the 2016 elections were certainly a surprise to the stock and bond markets. As we have seen in the past, asset prices may be briefly impacted by events like elections, but over time they are ultimately driven by interest rates, monetary policy, credit availability, economic growth and corporate earnings. During times of uncertainty, markets are often volatile, which may provide buying opportunity. This is why Rockland Trust’s Investment Management Group believes investing in a diversified portfolio of quality assets with a focus on downside protection is essential to achieving long-term goals.

No posts to display