Turning Volatility into Opportunity

What to do when “It” hits the fan.

If the experiences of 2020 through today are teaching us anything – it is that volatility can be even more unpredictable than many of us could have imagined. But here’s a silver lining: leading advisors are helping their clients to weather and even prosper amid such storms.

“The COVID crisis showed us how unpredictable markets can be and how quickly the economic environment can change,” says Michael Silver, CFP®, at Baron Silver Stevens Financial Advisors, LLC. “In the beginning of 2020, the economic forecast was very positive and most expected a good year in the stock market. But once the crisis set in, the deal changed quickly, and the markets went into disarray.”

Silver holds that 2020 will be remembered as a year that reinforced a wide range of invaluable investment lessons.

“In one wild and dramatic year we experienced the importance of having a financial plan, the value of a diversified portfolio, and the importance of being a disciplined investor,” he said. “If you followed these important principles, you not only weathered the storm, but you enjoyed a great return in 2020.”

Mike Ross, owner of Cornerstone Financial Group, also believes that experiences from navigating the Covid-19 crisis offer insight into sound strategies for longer-term wealth and financial management.

“One thing learned is that families should look at their emergency reserves. Is it enough? Does it need to be re-built? If anyone needs a reminder for why to have some money set aside for a rainy day, we just spent a year in it.”

Ross further believes that the net impact of the pandemic on wealth and financial planning is that it should inspire confidence in those already on the right pathways while spurring more to action.

“People may be led, if they haven’t already, to re-look at what is important to them. Do their budgets match their goals? Is their goal to retire comfortably or be able to send children to college? Hopefully the pandemic will encourage people to figure out what they need to do to get there,” Ross said.

RK headFor some firms, managing amid volatility is driven at the DNA level. At Point Wealth Management, advisor Robert L. Kilroy, CLU, CFP®, says that his group has always been trained to lean into client relationships using a proactive stance.

“We have procedures in place that are triggered by excessive market volatility.”

For example, when markets churn, the group initiates actions that include:

• Proactive emails, calls, client touches
• Calls to harness any available excess cash to take advantage of market opportunities
• Systematic tax-loss harvesting – realizing volatility-driven losses where they can do the most good – where appropriate

“When volatility rises, we proactively reach out to our clients to ensure they are reminded of and in tune with the plan we have in place for them,” says Kilroy. “Additionally, every client household has a relationship manager assigned to them. This makes it very clear to each of our advisors who they need to reach out to in times of volatility or market uncertainty.”

A particularly useful strategy amid volatility is to keep tabs on cash. In a rising market, for example, Kilroy says his firm uses these client touches as a way to source cash on the sidelines and any other opportunity. It is also important to be proactive in cases where there are changes in clients’ lives – for example, the sale of a business or property, change of job, or death of a family member.

But for these and related volatility strategies to bear fruit, they must be able to function when, for lack of a better description, “it” hits the fan. For Point Wealth, being located on Long Island in New York, weather-related emergencies over the years have helped sharpen the group’s operational crisis management capabilities.

“Superstorm Sandy in 2012, along with various winter storms we’ve experienced on Long Island over the years had prepared us to work remotely,” says Kilroy.

So when the pandemic struck, the firm was already equipped, having the systems put in place to ensure that the entire team could work from home if need be. This includes elements such as laptops instead of desktops, custom phone line settings to be transferred to cell phones, plus access to the groups customer relationship management tools and shared files.

Freedom Financial Planning LLC is yet another group whose operational footprint was well prepared for the Covid-19 lockdowns and accompanying volatility. Michael S. Silverstein, CRPC® says that serendipity and vision positioned the group as a relative leader in flexible yet secure communications and related technologies.

“My partner and I went independent back in 2013 and so we had the opportunity to build a company from the ground up,” says Silverstein. “As such, we were early adopters of cloud storage and remote work capabilities.”
However, little did they envision how powerful these tools would be less than 10 years later.

“During the spring and fall surge of the pandemic we and our staff were able to work remotely without missing a beat, and the addition of Zoom capabilities gives us the flexibility to meet with clients in person or remotely as the world reopens,” said Silverstein. “Overall, I think one of the main lessons I’ve learned from this experience is to further embrace technology.”

For a final look into how technology is enabling the industry to help clients manage amid volatility, consider Gary Scheer LLC. Gary Scheer, RFC®, CSA®, who is also managing director at Redwood Tax Specialists says that in 2018, he and his teams made the decision to go digital. The moves forced them to eliminate what they didn’t need from each client file and scan the rest into folders into the group’s customer relationship management systems. A range of additional steps enabled the group to operate virtually.

“We set up PC Anywhere – an application allowing executives to access files from any computer remotely – for one of our team members who sought more schedule flexibility,” said Scheer.

Next, the firm added a VOIP phone system, essentially internet-enabled communication. Next came outbound text messaging and interoffice video capability with a remote back up system for client data.

“As a result,” says Scheer, “transitioning to remote work was seamless. Since clients and prospects were stuck at home with no social outlets and a lot of time on their hands, they were very happy to have meetings over ZOOM and other video platforms. I’ve learned that the public no longer expects financial advisors to have fancy offices and that it is very possible to provide a great client experience on a remote basis.”


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