Five Questions With: Kevin Vieira

Kevin Vieira was recently hired by Bank Rhode Island as a senior financial consultant. He has more than 20 years of experience in the financial sector, specializing in investment and financial strategies and managing transactions that involve mutual funds, exchange-traded funds, stocks and bonds.

PBN: Coming out of a year in which market investments, by and large, performed well, what should people be paying attention to in 2021 with regard to their portfolios?

VIEIRA: Although 2020 featured both significant ups and downs with the market, investors for the most part have been pleased with the current values of their portfolios – there was unexpected upside last year as people changed the way they lived.

Working right now with our clients to review portfolios and revisit asset allocations, many are asking what steps they can take to lock in some of their gains. Right now, just six companies comprise 25% of the S&P 500, meaning a lot of wealth is concentrated in a small number of holdings and people might be taking more risk than they realize. It’s very important to review your portfolios to ensure your asset allocation is appropriate for your goals. For some, that means rebalancing their portfolio to reduce volatility.

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PBN: Do you expect 2020 market and investor behaviors to continue and impact 2021? If so, how?

VIEIRA: Last year saw the most 401(k) transactions in more than a decade. That said, a large number of those moves were individual investors who reallocated their 401(k)s to more-conservative assets during the market’s downturn in March 2020. Unfortunately, that was not a good time to make such drastic portfolio changes and a lot of investors missed out on the robust recovery that followed shortly after. The hope is this underscores the importance that individual investors work with an experienced financial professional and are strategic with their asset allocation. It is so important right now for investors to take an active management approach with their investments.

PBN: In 2020, the market’s response to the pandemic was at two levels of extremes – do you think we could see that again?

VIEIRA: We entered 2020 with a low rate of unemployment and a favorable outlook for corporate earnings, and then the coronavirus and related impacts shocked the system, precipitating some panic, which led to a huge drop in value for the equity markets. What followed was the passage of a record stimulus plan and an accommodating Federal Reserve, which pushed interest rates to near zero and helped to support equity prices and real estate.

I do believe consumers are a bit more confident today knowing how the government responded in 2020 and considering the discussion of additional stimulus. I don’t think it’d be a surprise to see some level of a market correction in 2021, however if interest rates remain at these levels, I don’t believe we’ll see the volatility we experienced in 2020.

PBN: Is there a particular piece of advice you’d want investors to keep in mind as we look ahead? 

VIEIRA: When saving for the future, it’s important not only to develop a plan but to know when to adjust that plan as things change. Accumulating wealth is only a portion of achieving financial independence – coming up with a distribution strategy is equally important. This involves diversification from both an asset allocation standpoint and how your investments are taxed. Ultimately, this is about how much money you and your family keep.

Considering the current amount of the national debt, there’s uncertainty over future tax rates. And when people save for retirement, the majority of their assets are in tax-deferred accounts that become fully taxable when you begin to draw income. This, in essence, is betting on your individual tax rate being lower in the future. I don’t know what tax brackets will look like in the future, but most expect rates will be higher than today. By having a combination of tax-deferred, tax-free and nonqualified investments, investors will have flexibility to manage their withdrawals and generate tax-efficient income in retirement.

PBN: What is your outlook for the market over the next 12 months?

VIEIRA: The Federal Reserve has stated it anticipates keeping rates at historic lows for the foreseeable future. In addition, there is optimism for the passage of a new stimulus plan combined with the release of the vaccines to get us through the pandemic.

I have hope that come the fall, restrictions will be lighter and the economy more open. There’s a good amount of pent-up demand, which should have a positive impact on the overall economy. Ideally, this will lead to a broader array of companies and sectors participating in market gains; you never know with certainty where the next gains will come from. This is why we stress the importance of diversification and regularly rebalancing portfolios and having a financial adviser to support and guide you along the way.

Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.