The uncertainty and volatility we’ve all faced in the last month is unmatched in my lifetime. It’s shown ups, downs, fear, greed, headlines, press conferences, and then some more downs. Your life and emotions might feel derailed… I have felt the same way at times.
As a financial advisor, clients share their worry with me. They call and we talk through concerns – the little ones and the big. Sometimes clients need a simple 5-minute pep talk, and other times it’s a half hour analysis.
I deeply value both conversations. I WANT clients to ask me the hard questions. If I don’t support my clients during turmoil and provide the answers they need, what is my purpose?
In times like these, financial advisors really need to make a difference.
If you haven’t reached out to your advisor to simply express your thoughts and concerns, please do it now! They need to know where you stand, and you need to offload your financial concerns.
If you don’t know what to say, here are tough questions to ask your financial advisor:
1) How does this volatility impact my long-term plan?
If you are already withdrawing from your portfolio, your long-term plan may not look as rosy as before. Perhaps your advisor has recommendations to get you back on track.
If you are near retirement, you might need to seriously consider and monitor when is the best time to retire. This might be a tough question for both you and your advisor… but it is important that they are honest with you, as well as actively analyzing your next best steps when it comes to your financial future. If you want more thoughts on when you can retire, I have a helpful blog HERE.
If you are still accumulating wealth, your advisor may have some encouragement to share.
2) What can I do to best take advantage of the market downturn?
No matter what stage of life you are in, there are certainly ways to capture a silver lining. Perhaps you can contribute and buy low, make a Roth IRA conversion, refinance some debt with low-interest rates, or harvest capital losses to offset a gain you might have incurred this year.
A good advisor will present you with ideas to turn losses into opportunities.
3) What has your firm done in response to other bear markets and how does that compare with what you are doing today?
Firms learn a lot from the past. It is helpful when a firm has gone through a bear market before and has learned a few things along the way. How the firm handled market turmoil, managed their portfolios, and interacted with their clients during these periods show an important window into what you might experience with them in the future.
This question is sure to lead to informative conversation.
4) From what I have shared with you about my fears, do we need to reassess my risk tolerance?
You are likely invested according to your pre-determined tolerance for risk. If you can tolerate market volatility, perhaps you are 75 – 100% invested in stocks/equities. If you tend to lose sleep over losses, you might only have 50% stocks or less. There should have been a number of factors about you personally that led your advisor to choose your portfolio.
At least I hope so!
Share all of your thoughts and concerns with your advisor. From there, your advisor should be able to gauge whether you are still in a portfolio that is appropriate for you.
5) How are you personally impacted by these market and economic events?
Your financial advisor is a fellow human being who is surely impacted in some way by the pandemic. This question can help you understand your advisor’s actions both in business and their personal lives.
How is their income affected? Is their revenue going down because they are fee-only managers or is revenue going up from commission on increased trading?
In another aspect, this question can also show your concern for them. This is a trying time for many financial professionals, and we all need to support one another. The more you know and trust one another, the more valuable and richer the relationship will become.
When it comes to talking to me or your own financial advisor – don’t hold back! You would never go to a doctor’s office and tell them about your foot pain while secretly hiding a gaping wound on your leg. That would be crazy! You would tell them about all of the medical issues that are affecting you at the moment.
Similarly, you need to tell your financial advisor about all of the life circumstances and financial worries that you are dealing with. They need to know the full picture to best set you up for success!
Stay informed! A reminder that my team creates great content. Check out all of our COVID-19 resources HERE.