Creative Planning Gives Back to Community

Global Chief Investment Officer
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On last week’s Behind the Markets podcast episode, we spoke with Peter Mallouk, CEO of Creative Planning, about how his firm has navigated the current pandemic and where he sees both the financial markets and the advisory business going forward. We also discussed the tremendous and generous support Creative Planning is providing to its community during this extraordinary time.

Mallouk wrote a book called The 5 Mistakes Every Investor Makes and How to Avoid Them. Unfortunately, Mallouk sees investors making textbook mistakes again in March as they panic at market bottoms and lower their equity exposure, resulting in record outflows from equities throughout the industry.

Another common mistake is gambling on very small stocks. One example that is popular in social media today are the ‘Robinhood traders’ buying bankrupt companies. Mallouk sees these same bear market behaviors over and over, much like how every horror movie starts and ends the same way.

Be Thrilled with Market Volatility

Creative Planning counsels that without the market volatility we’ve experienced this year, so much money would pile into stocks that the higher returns they typically offer over less volatile assets would not be available. This is what creates the equity premium that investors should embrace.

A Lasting Legacy of this Crisis: Low Bond Yields

Every bear market leaves a legacy that influences market dynamics for a long time. Mallouk expects low bond yields and low expected returns for bonds will be that factor today.

While historically many investors were able to achieve long-term objectives with 50/50 stock and bond mixes, or even 60/40 portfolio allocations, Mallouk thinks those now expecting 7%–8% returns with a 70/30 stock/bond allocation will be disappointed. Those returns no longer appear achievable.

There is a now a widening gap between the expected returns of stocks and bonds, and this will be a key asset allocation challenge looking ahead.

Creative Planning emphasizes high-quality bonds and sees less motivation to go out into the credit spectrum for additional yield.

Strategies for Today and the Long Run

Mallouk’s team employs a disciplined rebalance strategy that adds to exposures in sectors and size cuts that have been the most beaten down. He sees such an opportunity today in small caps, which often lead the markets during recoveries. While technology appears invincible today after such strong performance, Mallouk warns these issues appear that way, until they aren’t.

Giving Back to the Community

In order to best take care of their clients, Creative Planning told all their employees their employment and salaries were guaranteed in the current pandemic situation, whether it takes five months or five years. The firm is also providing ways to help their employees de-stress.

Kansas City was one of first cities to shutdown public schools, and Creative Planning donated $1 million to provide one million meals for school children now being virtually educated from home.

Mallouk indicated that Creative Planning further donated $12 million to help some of the greatest challenges our society is facing today—which is education, mentorship, and scholarships that help people get good jobs. Its donation will help with basic security, food, and shelter as well as further job training and scholarships. Creative Planning is currently paying for education for 121 students and giving each of them a mentor to help them through college.

While there is much political debate on how to solve these challenges, Mallouk emphasizes there is no debate on how we can all work on solutions to break the inequality cycle.

The groups that Creative is working with are Feeding America and Give Something Back. They also continue to work on a financial literacy initiative.

This was a great conversation with one of the leading independent wealth management firms that clearly has even larger aspirations. You can listen to the full conversation below.


For more investing insights, check out our Economic & Market Outlook


About the Contributor
Global Chief Investment Officer
Follow Jeremy Schwartz

Jeremy Schwartz has served as our Global Chief Investment Officer since November 2021 and leads WisdomTree’s investment strategy team in the construction of WisdomTree’s equity Indexes, quantitative active strategies and multi-asset Model Portfolios. Jeremy joined WisdomTree in May 2005 as a Senior Analyst, adding Deputy Director of Research to his responsibilities in February 2007. He served as Director of Research from October 2008 to October 2018 and as Global Head of Research from November 2018 to November 2021. Before joining WisdomTree, he was a head research assistant for Professor Jeremy Siegel and, in 2022, became his co-author on the sixth edition of the book Stocks for the Long Run. Jeremy is also co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” He received his B.S. in economics from The Wharton School of the University of Pennsylvania and hosts the Wharton Business Radio program Behind the Markets on SiriusXM 132. Jeremy is a member of the CFA Society of Philadelphia.