Customer Profiles: Asset Revesting Dentist

Asset Revesting Dentist

Bill has been a dentist for thirty years, and now, at sixty-two, his wife Mary is encouraging him to retire, as she recently did. Their two adult sons have their own young families, and Mary is concerned that Bill doesn’t spend enough time with their grandchildren. Since dentists have an average retirement age of 69, retirement wasn’t really on Bill’s radar, but the more he thinks about it, the more appealing it sounds.

His days start early, with sedation dentistry procedures taking up most mornings. Routine fillings, extractions, crowns, and consultations take up his afternoons, and his evenings are spent doing all the practice-related duties he couldn’t get to during the day. It’s a long day, to be sure, but Bill has always loved being a dentist. He genuinely cares for his patients, and they, in turn, wouldn’t dream of going anywhere else.

Having grown up in poverty, Bill has a complicated relationship with money. He constantly fears losing it and worries that it’ll be too easy to overspend if he retires. Ideally, Bill wants to continue to live his current lifestyle in retirement. That means remaining a member of his country club, dining at the newest restaurants at least once a week, going on weekend hunting trips with his college buddies, traveling abroad several times a year, and enjoying all the latest tech gadgets.

After a long conversation with his wife, the couple agreed to talk to their financial advisor about the potential for retiring in the next three years. Their advisor first asked them to estimate their anticipated annual spending for their desired post-retirement lifestyle. While they have a couple of million saved and anticipate being able to sell Bill’s practice for a few hundred thousand, the income they need to maintain their lifestyle for 20-25 years seems unattainable.

Their advisor has suggested a conservative mix of stocks and bonds with the ratio determined by Bill’s age, a common strategy used by major firms like Fidelity and Schwab. But what happens if, when they need to begin withdrawing the funds, the rates have increased since their purchase? If the markets and Bill’s holdings happen to be down in three years when he needs to start liquidating his stocks, he will lock in losses, and there is no way he and Mary will have enough savings to last through their retirement.

This truth was driven home shortly after meeting with their financial advisor. One morning Bill woke up to find that one of his financial sector holdings had fallen 25% after the failure of a niche bank. This event had sent traders into a frenzy, wondering if the entire banking sector was in trouble. For over a week, the volatility of his stocks served as a sobering reminder that his current approach to trading wouldn’t work if he ever wanted to sell his practice and retire with the lifestyle he so enjoyed.

Another factor bothering Bill was the potential business volatility he’d faced in his dental practice during the 2020 COVID crisis. At that time, he saw few clients in an emergency capacity only and watched his business decline significantly. Though he didn’t have to do it, he and Mary had also decided to keep paying his staff at half their salaries for as long as they could manage it. Bill knew this was the right decision, but the impact on his income was stressful. While another global pandemic wasn’t a high-probability occurrence, just having experienced this event made him wonder what else could be on the horizon.

Desperate to find a stable investing route so he and Mary could feel comfortable as retirees, Bill spent months researching different strategies online and in books. He reacquainted himself with strategies such as buy-and-hold, diversification, 60/40, etc. But these no longer seemed like the best option for him. Continuing the search led him to an emerging category of investing called asset revesting.

He learned that asset revesting is a strategy that involves watching market trends, sentiment, and price charts to determine which was the most likely to rise or fall. If a price began to fall, capital would be moved out when a protective stop was reached or if the overall trend pattern had changed. The capital would then be cycled into a different asset that showed signs of imminent rise. When there were no assets with rising signals, capital was kept in cash to remove the potential for losses.

Well, the more Bill read about this strategy and its protective stops limiting losses at 6%, the more he realized that it might be the best choice for him and Mary. When he read about how the strategy could be employed using ETFs since they are less volatile than individual stocks and trend more consistently, he was convinced it was the right strategy for him.

Bill talked to Mary about what he had learned, and together they found an asset revesting signal newsletter that offered autotrading at no extra charge. Much like the Robo advising offered by firms like Betterment and Wealthfront, this asset revesting service would automatically move their capital in and out of positions. The difference was that the trades would be executed following asset revesting signals and automatically add profit targets, protective stops, and limit orders.

After making the change, Bill watched his investments like a hawk. He saw how asset revesting was rooted in preventive movement mixed with modest gains and was pleasantly surprised to see his money grow. Just before stocks and ETFs would decline, the autotrading service would move Bill’s assets to cash or cash equivalents to buffer against losses. As soon as his holdings reached a certain increase, the system would automatically sell a portion of the position to help realize gains.

Bill’s assets were moved based on the asset hierarchy, designed to avoid volatility and protect portfolios from diminishing price trends. Though some trades did not work out, by identifying trend changes, often before protective stops were reached, and constantly moving assets, they were never in one place long enough to go down drastically. Bill had never felt so safe and confident about investing. His money was growing despite a choppy market, and he looked forward to being able to retire within the next three to four years. He and Mary had an exciting retirement to live, and they both wanted to get on living it!