Healthy insights from financial advisors
Don’t know about you, but pretty much anyone I talk to lately relays some version of, “I am so done with COVID-19.”
It is wishful thinking.
Just look at the increasing number of deaths due to COVID-19 and the families impacted. And, look at the economy sputtering along as the stock market climbs and plunges with all the thrills and chills of the world’s highest rollercoaster ride. It is safe to predict that COVID-19 isn’t done creating havoc in our lives.
Yet, despite its major inconveniences and the economic insecurity, the pandemic has been a proficient tutor in how to get through a national emergency perhaps relatively unscathed. While lockdowns still loom and mask wearing is debated, the financial services industry has learned a few lessons during 2020 that ought to help financial advisors and their clients cope with whatever is coming next.
Here’s the breakdown:
Don’t Panic
Remain calm for all is indeed well.
We’ve been through worse.
This too shall pass.
These mantras that are easier said than lived – especially when it comes to money and even more importantly, losing money.
Yet, in the case of investing, all three are quite true and are ideals that prudent advisors find themselves modeling for anxious clients.
“As with past crises, the effects pass and markets move on,” said Erik Ford, principal and advisor with Ford Wealth Management, LLC, based in Glen Ellyn, Illinois. “We must avoid getting caught up in the moment and remember that we are investing in long-term economic growth, which periodic crises generally interrupt, but do not derail.”
Gregory Prato, CEO at Prato Capital Management in White Plains, New York, echoes that sentiment.
“When market volatility and declines are experienced, we gently remind our clients in our discussions that we’ve planned for this and that when experienced, it’s not necessarily a reason to make changes to the investment strategy,” he said.
His firm relies on the philosophy Prato calls, “Using History as a Guide,” which he believes demonstrates that financial markets have done more than recover from crisis – as financial markets recover, the markets move higher in time.
According to The Balance, a leading personal finance website, the stock market is up more than when it is down.
In a late June 2020 article, The Balance, detailed the market’s 16 bear markets and 14 subsequent bull markets since 1926 in which 20 percent declines and 20 percent gains were made, respectively. In the end, the market moved ahead and higher after each bear market.
It’s all about perspective.
Keeping an investor’s mind on the long-term goal and an investor’s emotions from playing a role in decision-making is the key, recommends the Motley Fool, an online investing guide.
Admitting that yes, “the stock market has been swinging lately, and while it might be tempting to cash out investments to avoid further losses, doing so will only lock in any losses you’re already looking at,” wrote Motley Fool.
Enhance the Client’s Experience
The challenges of a crisis bring the opportunity to ramp up customer service. Here are some examples of how advisors are tackling the obstacles that COVID-19 has created while securing client trust and confidence.
Provide answers as quickly as possible:
“I have to tell you,” began Nick Fuller, owner of Fuller Financial located in Gilbert, Arizona. “We respond to clients promptly. I am the type of person that if I ask a question, I am looking for answer fairly quick, not an answer a week from now, but an answer today or no later than tomorrow morning. We give our clients the same type of service. When they ask something, we are prompt in getting back to them.”
Advisors that kicked their client services up a notch or two did what the U.S. Chamber of Commerce suggested in its online blog addressing the importance of customer service during crisis.
“The situation is evolving rapidly, and no one is quite sure what news each day will bring. Customers can empathize with merchants (advisors) facing a crisis, as long as you communicate with them properly,” the chamber wrote in an article titled, 5 Ways to Retain Your Customers During the Coronavirus Outbreak. “Give them a way to stay connected.”
Michael J. Day, LPL Financial Advisor with Grand Canyon Wealth Management located in Gold Canyon, Arizona, did just that.
“I have taken the pandemic as an opportunity to engage with my clients and explore life scenarios with them that would have been unthinkable a few months back,” said Day. “With these discussions I encourage them to examine areas of risk that were previously invisible and see what steps need to be taken to address these issues if it becomes necessary.”
Aaron Lieberman, managing director at Marathon Wealth Management in Melville, New York, dramatically increased the release of educational/informational articles and videos on the firm’s various social media accounts. His assumption that clients’ enduring stay-at-home orders might have more time on their hands to follow social media turned out to be more than a hunch.
His reasoning for a surge in social media outreach?
“During times like these, it is easy to abandon long-term financial planning and make decisions that could be costly down the line,” said Lieberman. “I am here to make sure my clients are fully informed and comfortable with the decisions they make.”
Make High Risk Clients a Priority
Market activity such as what happened on March 9, 2020 when the market took its largest point plunge in history losing 2,013.76 points or 7.79 percent of its value easily makes any investor nervous. But it terrifies an investor whose “plan” was to retire in the spring or summer of 2020. These investors are the clients that need a lot more than handholding.
These clients are at greater risk financially speaking and should be a priority for an advisor, according to Jorin Bale, a financial advisor registered through CUSO Financial Services, LP, working at Elevations Credit Union in Boulder, Colorado.
“Having the ability to identify specific clients within your book of business that have higher risk such as those who are retiring soon, etc., helps to identify a starting point of where to begin making these calls,” Bale suggests.
You Can Work Through a Pandemic
Transitioning to remote work isn’t simple. Work patterns are disrupted; office software isn’t always supported as efficiently by home-based internet services, and online video conference calls don’t always run as smoothly as hoped.
Yet, as Phillip C. Henry, president of Henry Wealth Management based in Bridgeville, Pennsylvania, discovered, bringing the office home can work.
“We learned that we could work remote. We had built a culture over the years. Working remotely, we had no idea how that could work, but we did it,” he said, adding that the firm used morning and afternoon team review calls to stay connected with each other, and they leveraged technology to stay in touch with clients.
It worked.
“Ninety-nine percent of our clients stayed with us and stayed in their portfolios,” said Henry. “We believe it is because of the education we did ahead of the crisis and our staying in touch during the crisis.”
Working remote most likely isn’t going to end anytime soon – if ever.
According to a September 2020 report by Equitable, 87 percent of brokers surveyed said the pandemic has moderately or considerably changed the way they do business and half reported they would only return to the office once they personally felt it was safe to do so.
In a recent CNBC article, details from the Conference Board, a think tank conglomerate with offices on four continents, regarding remote working past the pandemic indicate the trend will continue and grow.
“Remote work may be the most influential legacy of the COVID-19 pandemic,” the report concludes, stating that 77 percent of the human capital executives interviewed for the study, From Immediate Responses to Planning for the Reimagined Workplace, said they expect that the numbers of employees working from home (at least three days per work week) will increase once the pandemic ends.
Take Care of Yourself
Whether you work at the office or from home or from a coffee shop, you can’t take care of others if you don’t take care of yourself.
The Mayo Clinic Health System, which is one of the nation’s leading medical care providers with locations across the country, continues to encourage readers of its online publications to remember to take of themselves during the pandemic.
“Taking care of yourself is important so you are equipped to help your family through this time,” the clinic stated in its online article series titled, “Speaking of Health.”
Personal health recommendations included exercising every day.
That’s advice that advisors such as Lieberman found that to be true during the pandemic and intend to continue to practice self-care.
“I’ve been more intentional about practicing self-care,” said Lieberman. “I have a morning success ritual. I exercise, I meditate and participate in personal development groups. Most importantly, I do my best to get a good night’s sleep. Combined, these things help me tackle my work and move forward each day.”
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