Client Questions in Uncertain Times – Investor Questions Answered

by Michael Branham, CFP®

As Americans and the world face uncertain economic outcomes, investors are asking important questions to understand what the bear market means for them.

Michael Branham, Partner and Sr Financial Planner, has collated frequently asked questions (FAQs):

FAQ: Should I be concerned about this market volatility?

 First, we appreciate and acknowledge how difficult it is to watch financial markets fall so sharply.  Each of our experiences with past bear markets shapes how we are thinking today, understandably triggering a range of emotions. It’s not enough to simply say “this too shall pass”. What is critical as downward volatility continues is to review the financial plan that’s been built, focus on your goals, and to review how your portfolio has been constructed, in advance and in anticipation of these types of events, to weather the storm.  When we can put things in the greater context of time frame, goals and financial stability it often brings reassurance.

FAQ: What are the biggest risks you see?

 The biggest risk is uncertainty- in markets, in employment, in a client’s health, and in how, as human beings, we handle the current challenges and better prepare ourselves for future challenges.  The truth is we don’t know how long this will last, how deeply affected the economy will be, and how our institutions will offer triage and support- immediately and in the future.  Those answers always come with hindsight.  Embedded in uncertainty is the risk of making decisions today that can affect the long-term viability of individual portfolios and financial plans based on fear or based on information from sources that pretend to know all of the above.

FAQ: What is the biggest opportunity you see?

It would be easy to simply say the “opportunity” is to buy into lower market valuations, which is happening in your portfolio.   But the opportunities extend beyond that, primarily to the knowledge we’ll gain from an incredibly scary and difficult situation.  Businesses are testing their continuity plans in a real-world situation, it’s no longer just conceptual.  Families are being united at home, learning more about how each interacts with their daily lives under “normal” circumstances.  And institutions and governments are being compelled to think about their people first concerning policy and solutions.  Sometimes it takes a crisis to see who people truly are, what they’re capable of, and how resilient we are as a human race.  Generations are defined by how they handle adversity, not by how they react when everything is exceptional.  The world will look slightly different when we come out of this global health crisis, so we’ll have to decide for ourselves how to adapt and change with it.

FAQ: What advice are you giving to clients who may be facing a layoff?

This is situational dependent on the client’s preparedness within their plan, but that’s why they work with a planner in the first place.  When a client begins working with us, we talk about the importance of planning as a long-term process.  It’s not enough to simply deliver a plan and walk away, largely because “life happens” and part of our value as a professional is to help them adapt when it does.  For clients affected by layoffs, it’s critically important to review and adjust the plan early on including the goals, the spending and savings targets, the resources designed to cover this possibility and to stay in regular communication about the progress and effects of the job change.  We may also be a good resource as they look to re-enter the job market, leading conversations about future desires, existing job possibilities, or a career change, if necessary.

FAQ: What should I be doing right now?

Like many of us, it’s easy to get bogged down in an endless flow of information, news, and opinions.  I encourage my clients to focus on being informed, but to direct their focus to those things they can actually control.

Everyone’s personal circumstances are unique, and we encourage you to contact your planners to review your financial plan. We are here for you, give us a call.


 

Michael Branham, CFP®, is a Sr. Financial Planner in the Alaska office of The Planning Center, a fee-only financial planning and wealth management firm.

Email him at: mike@theplanningcenter.com.

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