Opportunities for rebalancing in a volatile market

Julia Carlson, CEO of Financial Freedom, joins Yahoo Finance Live to discuss when is a good time to consider a roth conversion and what investors can do to rebalance their allocations in the market.

Video Transcript

MYLES UDLAND: All right. Welcome back to "Yahoo Finance Live." Myles Udland here in New York. It's time now for Retirement Ready, brought to you by Fidelity. So we've seen a lot of dislocations in the market, a lot of things about investing now are different than they were just a month ago. How can retirees and savers maybe take advantage of some of that? We're joined now by Julia Carlson. She is the CEO of Financial Freedom.

So Julia, I think a lot of retirees or just normal folks, like us, saving for retirement have 401(k)s, IRAs. We're just trying to maybe forget our passwords right now and not look at the damage that may have been done. But what are some things that we can do? We've talked a little bit on the show about rebalancing your allocations if things got out of whack during the last month.

JULIA CARLSON: Yeah. Thanks for having me. And of course, if you are in retirement and you had a balanced portfolio, then for sure, most likely, things got out of whack here. So considering to rebalance your portfolio definitely makes sense. Hopefully, that may have happened, you know, a week ago when the markets were lower. We've had quite a comeback here.

We are not adding risk to portfolios at this moment, but I think rebalancing to how you should be allocated would be very appropriate.

MYLES UDLAND: And then we've seen rates come down a lot. You know, there's been many times over the last several years when it's been like, all right, you got to refinance now because rates will never get lower, and then they always did go lower. So what are some things that people can do right now maybe to take advantage of those.

JULIA CARLSON: Yeah, for sure. I would recommend looking at your mortgage and calling your banker, calling your mortgage company, seeing if it does make sense for you to refinance.

Also what we are doing for our clients is looking at Roth conversion. So this could be an opportunity right now where if maybe you are still working and if your income is going to get jeopardized this year and you have a lower income, it could make sense to do some Roth conversions at this time, and then allow your portfolio to come back and recover inside a Roth IRA.

RICK NEWMAN: Hey, Julia. Rick Newman. I've seen some reports with concerns that some companies that are at risk of closing have 401(k) plans they administer on behalf of their employees. It could be a couple hundred thousand companies, you know, each with a bunch of employees who would be at risk. Should you be doing anything with your 401(k) if you think your company might close? Or does that just all get worked out?

JULIA CARLSON: Boy, so it would get worked out. And to be able to take action now, you'd have to make sure that your plan had in-service distributions. So if you were concerned about that and your plan allowed for in-service distributions, that would be something that I would consider if your company was going to be at risk of closing. But it would be figured out. I mean, that is what ERISA is for.

MYLES UDLAND: Yeah. I guess if your administrator doesn't go out of business, then I guess that your money would be secure in that fund. Is that correct?

JULIA CARLSON: Well, correct, yes. Well, secure in the funds-- I mean, yes. It doesn't guarantee the value, obviously, but yes, you will have those funds in there.

MYLES UDLAND: All right. Julia Carlson is the CEO of Financial Freedom. Thanks for joining us. Have a great weekend.

JULIA CARLSON: Yeah, thank you.