How To Guide Clients On Cash Investments

Why Clients Shouldn’t DIY Their Cash Investing, And How To Identify Ideal Cash Investments And Place Them In A Portfolio

A sustained environment of higher interest rates with positive real yields coupled with the Federal Reserve’s caution about lowering rates this year have brought advisors back to familiar territory – cash investments. Clients who looked to generate yields elsewhere for years are again asking whether they should hold cash and in what types of investments.

We spoke with three advisory business executives about how to advise clients regarding cash investments: Ted Brooks, Chief Investment Strategist, Nordwand Capital; Matt Liebman, Founding Partner and CEO, Amplius Wealth Advisors; and Tom Gogola, VP, Investment Strategies, Aaron Wealth Advisors. We asked each of these Dynasty Financial Partners affiliates to address a different angle of the issue.

Our questions and their responses follow.

Ted Brooks, Chief Investment Strategist, Nordwand Capital

Ted Brooks, Chief Investment Strategist, Nordwand Capital
Ted Brooks, Chief Investment Strategist, Nordwand Capital

WSR: How can an advisor build a client portfolio in a “higher for longer” interest rate environment? How should cash be incorporated into the portfolio for liquidity or risk-aversion purposes?

Brooks: First, cash can be a bigger piece of an allocation in a “higher for longer” environment because it presents potential for nominal and real returns, which is an improvement over the world we all lived in over much of the 15 years leading up to 2022.

Next, cash, enhanced cash and short-duration fixed income instruments can help take the burden off riskier assets that have dominated investor portfolios over the years of a zero-rate world. An opportunity to generate 4% to 7% yields with limited duration or credit exposure represents a chance to reduce risk without having to tolerate zero or negative real return expectations. In a market where equities might look stretched, this can be a welcome addition to a portfolio.

Finally, fixed income and credit broadly can play more active roles in portfolios – amplifying this same point about diversifying portfolio exposures and risk while taking advantage of higher interest rates and yields. We think this can be accomplished through a variety of cash, bond and loan/private credit exposures that can capitalize on segments of credit that will benefit from receding rates and also from “higher for longer” rates.

Recent Federal Open Market Committee (FOMC) data suggest there is some movement off their 2.5% long-term rate guidance and perhaps starting to set expectations closer to 2.75% to 3.00%. This can be constructive for broader diversification and risk mitigation.

Tom Gogola, VP, Investment Strategies, Aaron Wealth Advisors

Tom Gogola, VP, Investment Strategies, Aaron Wealth Advisors
Tom Gogola, VP, Investment Strategies, Aaron Wealth Advisors

WSR: Many investors believe that cash investments are simple enough that they can handle it themselves. Is that true, or are they better off letting their advisor handle it? What can an advisor do with cash investments that is hard for an investor to DIY?

Gogola: Pulling the “trade” trigger can be the easiest part of managing cash in a portfolio, as most brokerage accounts offer a convenient way to access higher yields on cash at little to no expense. The more difficult part is determining what vehicle or approach should be pursued, and how much should be allocated to cash.

In more granular and complex situations, having a trusted advisor may serve investors tremendous value. Generally only institutional level firms or RIAs have access to world-class managers offering solutions designed to help clients meet their cash flow needs while maintaining optimal portfolio liquidity. Forecasting and planning are also components of cash management in which a trusted advisor can add value.

Access to cash flow simulations and scenario analysis enables real-time insight into positions and liquidity risks. In short, the need to rely on a trusted advisor for cash management is determined by client and situational complexity.

Matt Liebman, Founding Partner And CEO, Amplius Wealth Advisors

Matt Liebman, Founding Partner & CEO, Amplius Wealth Advisors
Matt Liebman, Founding Partner & CEO, Amplius Wealth Advisors

WSR: Is all cash created equal? Are there better cash investments for clients depending on their needs? Are there better cash investments for 2024?

Liebman: In today’s investment landscape, the importance of safety in cash investments cannot be overstated, particularly considering the risks associated with other asset classes.

Short-term Treasurys provide minimal default risk, modest yields and easy liquidation. Treasury-only money market funds providing safety alongside slightly higher yields compared to traditional savings accounts. CDs offer another low-risk avenue for preserving capital, although they may involve a lock-up period. These investments offer stability, liquidity and government backing, ensuring reliability even in volatile market conditions.

In the current landscape, with potential interest rate fluctuations and market uncertainties looming, these cash investments remain prudent choices. While their yields may be conservative compared to riskier assets, their emphasis on safety ensures the protection of principal, particularly appealing to clients with short-term liquidity needs or a conservative risk tolerance.

Advisors play a crucial role in educating clients about the significance of safety in cash investments, particularly during periods of market volatility. By highlighting the stability and security of CDs, short-term Treasurys and Treasury-only money market funds, advisors can guide clients through uncertain market conditions while safeguarding their capital and maintaining liquidity. This prudent approach to cash management is fundamental in ensuring financial stability and peace of mind for investors.

James Miller, Contributing Editor and Research Analyst at Wealth Solutions Report, can be reached at

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