as the country experiences its highest rate of inflation in 30 years financial advisors are facing a barrage of questions from clients how bad will it be and how long will it last what does it mean for my finances and for my investments and inflation could get worse if new covid variants further strain global supply chains scare away workers and crank up consumer demand for stayathome pursuits like home improvements and exercise equipment for this week’s big q we asked a crosssection of advisors what advice are you offering clients about inflation dean harman managing director harman wealth management inflation has been here for a year it’s been 2 3 4 but people are starting to really feel it now we are moving to the point where inflation is not temporary the fed will likely have to raise interest rates to get it under control from an investing standpoint we were concerned five or six months ago and positioned portfolios accordingly we bought some commodities but the biggest adjustments were in fixed income we’ve been buying things that are less sensitive to inflation like convertible bonds a lot of fixed income is overpriced right now in an inflationary environment the people who are going to win are those who have borrowed money i was talking two days ago with clients who are buying a home and my advice was to put the minimum down finance as much as you can and get a 30year mortgage they have the money for a larger down payment but i told them to keep it in their portfolio keep it growing they are probably five years away from retirement and are thinking in terms of paying off the house but i told them all the rules that your parents went by are out the window elizabeth mannen berges advisor wells fargo inflation clearly is one of the biggest risks to a portfolio today and people ask about it constantly their first question is is it temporary or is it permanent and my answer is both the transitory elements of inflation might include food and energy and autos those things are going to straighten themselves out by the first half of 2022 but we’ve got some issues longer term green energy is definitely more expensive there are wage pressures and global trade is getting tougher those are some of the things that make the longterm inflation outlook not as rosy we’re used to 2 inflation i think we need to get used to a number closer to 5 so how does that play out for your portfolio you always have to take into consideration risk tolerance and time horizon you have to look at how many years you have until retirement how many kids you have to put through school and things like that i think most people need to look at an allocation to real assets and most people are going to do that through etfs so you’ve got to decide whether you’re going to take that from equities or bonds and if you had an allocation to real assets of 5 maybe you’re going to 10 or if you had 10 maybe you’re going to 20 michael yoshikami ceo destination wealth management you need to prepare for higher inflation but not as high inflation as people are concerned about i think inflation will settle down next year and probably be around 3 it remains a good time to refinance your mortgage rates are still very low and it might be a reasonable time to take home equity lines to pay off higherrate credit cards from an investment standpoint keep durations below the average of the bond market and make sure you have at least good or very good credit quality it’s probably not necessary to be 100 triplea credit quality and flexibility can actually help you get more yield inflation between 2 and 4 tends to be an ok environment from an equity standpoint and we think that that’s probably where inflation is going to settle in next year we’ve already shifted money into companies that have pricing power and companies that have strong intellectual property we think it makes sense to be involved in the technology or pharmaceuticals sectors we also like financial services with high dividend rates and higher netinterest margins when interest rates actually go up those factors will helpful from a profit standpoint michael policar founder ngp financial planning what i’m telling clients is “don’t panic this happens we just haven’t seen it in a long time” i think the numbers are going to be somewhere in the 4 to 5 range for the year which is something we haven’t seen since 1991 but i don’t see it being like the ‘70s and early 80s where we had 10 years of 4plus rates of inflation inflation may stay elevated for another year or so and then will probably start to come back down and level out i’m telling clients to not pay off their mortgages i told one client last week “i know your goal was to pay off your mortgage before you retired but given your interest rate which is below 2 don’t be in a hurry to do that” as far as investments i don’t want to trade based on inflation what i want to own now is pretty much the same as what i’ve always wanted to own companies that have strong balance sheets and pricing power nancy daoud advisor ameriprise financial services unprecedented actions have occurred lockdowns trillions of dollars being printed and potential legislation involving tax increases and more entitlements which leads to more dollars being printed there is no real precedent for this scenario making what’s to come uncertain over the next 12 months we expect that the stock market which we believe is currently undervalued relative to earnings will likely continue to go up inflation will continue as we recover from the pandemic it’s unlikely prices will go back to precovid levels but they may stop going up so rapidly which should be good for consumers we’re investing in commodities and real estate to offset the declining value of the dollar we also anticipate slower economic growth past 2022 with interest rates rising as always my advice to clients is to focus on their own timeframe and risk tolerance regardless of economic conditions and to continue to take precautions to prepare for the certainty of uncertainty