Op-Ed: Financial advisors help clients navigate through uncertainty

Wealth

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We are in a challenging time, facing rapidly evolving information about the coronavirus and the effects on how we work and live. Markets continue to function and are reflecting this constant change, which means greater volatility. Those circumstances don’t make it easy for investors to stay in their seats.

When markets are good, there’s naturally a lot of energy around putting more money in. When markets are bad, the energy is often about taking money out.

We’ve been through tough times before. Just about everyone remembers the 2008-2009 global financial crisis, even if they weren’t old enough to be in the workforce at the time. That period also saw the spread of the H1N1 virus.

More experienced investors may consider the tech boom and bust of the late 1990s and early 2000s as the bellwether event for a generation that assumed they could get rich on a handful of great stock picks. And for those of us who go further back, it was once hard to envision anything tougher than the 1973-1974 bear market.

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The recent decline has much the same feel as past crises, with fear, anxiety and worry elevated in the moment. Times like these are never easy for investors, who must grapple with the feeling that “things just might be different this time.” Scrolling through the news, it’s understandable to think the volatility is worse and longer-lasting than anything before.

There is, however, a notable difference between how financial advisors are equipped to react to market turbulence today and how they might have responded in the past — and I’m not just referring to increased video-chatting capabilities or virtual offerings.

In the last decade, there has been a fundamental shift in the financial industry toward holistic, independent advice models. More than ever before, financial advisors are providing personalized asset allocation, long-term financial plans and increased risk management tools. Thirty years ago, the industry was good for the stockbroker. Today, it’s better for the investor.

Holistic advice approaches not only help clients better understand their overall wealth picture, but also allow clients to breathe easier during periods of market volatility. Successful advisors will steadily and repeatedly lead clients from worry to calm by emphasizing the importance of sticking with their plans.

Now is the time when we see the value in the repeated actions that have turned into habits. Those habits, already established, should guide how a client approaches monitoring his or her investments or considering any adjustments. We would encourage investors to act today as they would have a year ago, or as they hope to act a year from now.

What has made the independent advisor strong today will make them even stronger in the future. As more investors choose to stand by their long-term financial plans, advisors have the chance to heed their own advice. The best advisors will choose to stay connected with their clients and be creative in evolving their services on a human level. Keep adding to your market volatility playbook — this isn’t the first time we’ve encountered turbulence in the markets, and it won’t be the last.

Through crisis comes clarity and opportunity. When investors win, advisors all win, so keep focused on the best interest of the client. In the end, the financial advice industry will be better for it.

— By Dave Butler, co-CEO of Dimensional Fund Advisors

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