It has been an unsettling time for investors of all levels as U.S. markets have gone from record highs into a vicious bear market in under a month. The volatility has been head-spinning as the entire global economy has effectively come to a stand-still as the global pandemic spreads from country to country. Helping individual investors navigate that and the other threats to their personal finances has financial advisors working overtime to help their clients through this unprecedented time.
Several of Investopedia’s Top 100 Financial Advisors offer guidance on how to address some of the most pressing client concerns.
An Unprecedented Time
As COVID-19 continues to spread around the world, investors are struggling to understand the long-term implications of the economic shifts they’re seeing. For advisors, offering clients a way to make sense of the changes can go a long way toward alleviating anxieties and helping clients create proactive strategies for the months ahead.
“This is an unprecedented time and people are focused on living their lives the best they can,” says Lazetta Braxton, Co-CEO and senior financial planner at 2050 Wealth Partners. And while the current circumstances may be different than what investors have dealt with in the past, the action plan remains the same: accessibility and a holistic approach remain key during this crucial time.
With the need for social distancing becoming more apparent, client communication has shifted, yet advisors are finding ways to keep their connections with clients as strong as ever. “What we strive to do is to be accessible,” says Douglas Boneparth, president of Bone Fide Wealth, emphasizing that virtual communication can be a powerful way of keeping clients informed about market trends. “Email is very effective and Zoom and a lot of similar technologies make it easier to stay connected.”
For advisors who want to connect with clients and prospects more broadly, social media platforms such as Twitter and LinkedIn can offer more opportunities to provide guidance and analysis on financial trends. “With social media, you have the profound ability for your clients to share that story with someone else,” explains Ted Jenkin, CEO of oXYGen Financial Inc. And that ability can translate to new business. “As much as the markets have gone awry, we’ve experienced a tremendous influx of new clients because of our ability to put new content in front of people.”
Addressing Investor Concerns
Along with finding ways to stay connected, offering clients key insights about the current financial climate is one of the best things you can do. While this advice should be general enough to address market conditions, it should also answer some of their questions about what the future holds—for their investments and their financial security.
“When people are at home, they have the news and online portals—it’s information overload,” says Marguerita Cheng, CEO of Blue Ocean Global Wealth. This can often lead to misunderstandings about the true impact of fluctuating markets and even to emotional decisions. But Cheng explains that countering information overload with relevant guidance can stem client fears and help investors stay the course. “There are positive things we can do to help our clients—and we can always tie it back to control.”
Part of that control comes with limiting unnecessary spending. “I’m focusing on the spending side because I feel like people can do something about that,” says Cathy Curtis, the founder of Curtis Financial Planning, LLC, explaining that this is often part of a broader conversation about client portfolios and volatility-related concerns. Above all, it’s important to customize your advice for each client’s individual situation, taking into account the things they’re most concerned about and the strategies that can help them achieve the security they seek.
Portfolio Management During Periods of Volatility
In addition to providing guidance on staying the course during volatile times, it’s also important to address proactive steps with clients—including portfolio rebalancing and tax-loss harvesting. “I’m strategically doing tax-loss harvesting with high-net-worth clients who have large taxable accounts,” says Curtis. “I’m also keeping them in the market but in different securities—usually ETFs. I use a technology tool called iRebal to do that, and I’m doing that case by case.”
While rebalancing and tax-loss harvesting are prudent and tangible ways of addressing market conditions, Ben Carlson, director of Institutional Asset Management at Ritholtz Wealth Management emphasizes that it’s important to have a clear strategy in place before moving forward with more proactive opportunities. “I think we’re seeing some dislocations,” he says, explaining that active trader opportunities could be especially risky during this time. “I think you have to be really careful about the way you’re trading these things and have to have a strategy in place when you do it.”
For those clients who want to be proactive while also minimizing risk, refinancing mortgage loans or debt could also be a good idea. “This is a great opportunity to reach out to your clients to talk about refinancing,” says Cheng. “It may not be appropriate for everyone, but it could be a great option, saving interest and time.” She emphasizes that this could be a particularly good option for clients who are planning to say in their homes for a while, or those for whom the cost savings could reach the break-even point within a few years.
The Bottom Line
Above all, what remains most important is to meet clients where they are while helping to limit their anxieties about the future. “We have to try to help people get through not only the market turmoil but also the potential emotional turmoil,” says Jenkin. Staying connected, offering insights, and providing comprehensive financial planning are all a part of the picture, and when done right, they can strengthen advisor-client relationships while also paving the way for a less bumpy future.