At the time of this writing, virtually everyone has personally experienced, or known someone who has personally experienced the negative impacts from the coronavirus. And even those who have not seen the impacts from the disease itself can probably attest to the negative financial impact it has had.
When I search online, I see dozens of articles written for financial advisers telling them what they can do to help reassure clients. You might see articles telling advisers to say things like:
Stay the course.
Don’t be scared. This too shall pass.
We’ve prepared you for this (cite list of things like building emergency savings, etc.).
We’re managing your situation.
This is great information—for advisers. Particularly those who were not around in 2008. This guidance certainly helps the adviser calm themselves down. In fairness, this alone isn’t bad, as a stressed-out adviser might be worse than no adviser at all. But it’s not enough for a client.
Of all the articles I have read, not one of them was written from a client’s perspective. After all, every truthful adviser will agree that it is times like these where financial advisers should be adding the most value to their clients—wouldn’t be useful to try and capture the client’s perspective in this?
So, here is a list of ways your financial adviser should be earning their keep—written from what I believe to be the client’s perspective.
1. Being available on terms that are acceptable to you.
Different people have different opinions about what this means. But the opinion that matters is yours.
By now, most advisers have contacted their clients to give them counsel, or at least readily responded to client inquiries. If your adviser has not reached out to you, that is a warning signal. If you’ve reached out with questions, and they haven’t responded, or you feel like you’ve been blown off—that’s a red flag.
But it is not enough for your adviser to make a phone call, check the box, and move on. Just because you did not have a question back in March does not mean that you don’t have questions now. Or, if you’re a small business owner who was too busy trying to figure out what impact your state’s shutdown orders meant to your employees to return a phone call—perhaps now is the time where you’ve had the chance to collect your thoughts and would like to talk with your adviser.
Many advisers are proactively touching base, through regularly scheduled emails, simply to keep in touch and share information. Hopefully, this content is carefully curated and comes from the heart, and not just forwarding canned content like ‘market updates.’ (Side note: If you’re interested in our Friday emails, you can subscribe here. We write and create all of our own content, unless there’s a well-written article we’d like to comment on and share with you).
At the very least, your adviser should be available to answer questions as they come up. Will you be scheduling an in-person meeting? Probably not. But your adviser should be able to have a phone call, answer emails, or schedule videoconferences (like Zoom meetings). If our 80 year old clients can learn how to use Zoom, and my 3 grade-school children can learn Zoom over their spring break, then your adviser should be reachable by videoconference, if not by phone or email.
And what does all this activity do? If done well, it addresses point #2.
2. Projecting calm.
Have you ever gone to the emergency room? If so, you (hopefully) have noticed that a well-run emergency room illustrates this exact point.
Is there a lot of activity? Usually.
Are there a lot of serious situations? Probably.
Do people die? Unfortunately, sometimes.
Do you imagine that this stress has an emotional impact on the ER staff? Almost definitely.
But a well-run ER staff manages even the most extreme circumstances with a professional calmness that belies the true stress of the situation. And when you’re a patient who is freaking out over your injury or sudden illness, you need a professional to do the following:
Reassure you when you’re overly concerned about an injury that’s not as bad as it appears
Properly triage (prioritize) which patients need to be seen in which order
Treat a wide variety of unexpected medical conditions
Properly diagnose and refer you to specialists who are more capable of addressing a particular issue than they can handle
When necessary, deliver bad news in a professional and courteous manner
Much like the calm you see from any emergency room staff member, you should expect the same professionalism from every person on your advisory team.
Are we all going through a difficult time? Yes—we all are. But professionals ensure that their focus is on the people they serve. After all, if you don’t see your advisor as being the level head in a crisis, why would you want to follow their advice? And if they’re not remaining calm because of changes in their situation, then how do you know that they’re paying attention to changes in your situation?
3. Seeing how recent changes apply to your situation.
Have you read the CARES Act? If not, that’s okay. The CARES Act is a 335-page document that Congress created to address the coronavirus pandemic, which the President signed into law on March 27th. Most people understand that the intention was to mitigate the economic impact of this pandemic for as many people as possible. But what does that really mean?
Let’s take one specific part of this document—the Paycheck Protection Program (PPP), which constitutes 9 pages. Originally, this program, which did not exist before the law was passed, provided $349 billion for small businesses. The Small Business Administration started accepting applications under this program on April 3, literally a week later. Two weeks after that, PPP had issued the full $349 billion and had to ask Congress for more funding.
When you think about this, that is a massive amount of work that went into helping millions of businesses.
Of course, the headlines are filled with horror stories about business who took advantage of this program, but that shouldn’t detract from the collective effort that has been placed on just this program. The sheer amount of work performed by the Treasury Department, Small Business Administration, and thousands of lending institutions to get this money into the hands of business owners as quickly as possible—it’s mind boggling.
When you add to that the thousands of lawyers, accountants, and financial advisers trying to help their clients make sense of this—it’s kind of like having the Boeing Corporation trying to fix an airplane while it’s in the air.
And there are literally hundreds of changes from the rest of the law, many of which could impact your retirement accounts, your tax bill, and a wide number of things.
So what does all this mean to you? That question should be just as important to your adviser as it is to you. And they should be earnestly trying to keep on top of these changes, trying to digest what they mean, then applying them to your specific set of circumstances. After all, the CARES Act will have different meanings for a small business owner, a recent college graduate, and a retiree.
And the good advisers are doing just that—for each of their clients. And since each client’s set of circumstances is different, this adds up to a lot of work—which your adviser should be doing.
Sending canned market commentary is not enough. Passing along some sort of ‘high-level’ article about the Payment Protection Program or putting your required minimum distributions back into your retirement accounts—that’s not enough, if it’s not addressing your specific needs. Because if your advisor isn’t doing this for you, then they’re certainly not doing the next thing.
4. Finding financial planning opportunities that you can take advantage of.
Throughout history, every crisis has ended with a recovery. A way through. Some recoveries have been quick. Some have been long overdue. But eventually, a crisis ends. We have faith that this will eventually end.
But there’s a difference between weathering the storm and coming out stronger. There are opportunities in every crisis. This one is no different—the CARES Act itself contains a plethora of those opportunities. This, on top of the traditional bear market investing opportunities (i.e. Roth conversions when investments are down, rebalancing into oversold investments, or dollar-cost averaging to take advantage of lower prices).
Your advisor should be on the look out for these opportunities. You might not take advantage of them, and that’s okay. But if you’re the client, wouldn’t you rather know and have the option, rather than find out later on that you missed out on an opportunity? Certainly, people who lived through the 2008 financial crisis can attest to the opportunities (missed or taken) that were available then.
But it’s not just about you. This is a tough row to hoe for everyone. Perhaps you’re not so concerned about yourself, but a loved one. Certainly, you can ask your adviser how that person could get the help they need.
5. Offering to assist people you care about.
A couple of caveats here. This isn’t about soliciting business, although certainly some great new relationships can be formed from something as simple as helping someone out. And it’s not about telling clients that their adviser is going to serve their friends and family for free. We often do this for some people who might not otherwise be able to afford our services, but are not here to cast judgment on how other advisers might do this (or whether they do at all).
Simply put, it is what it says—offering to help people that you, the client, might care about. It could be as simple as pointing that person to a resource or making an introduction to an estate planning attorney. Or it could be offering their services to friends and family of the client for a fee.
For example, we offer a complimentary phone appointment to anyone. When a client asks us to help their friend or family member, we use this appointment to figure out how we can help them. And if we can do so for free, and they don’t express any interest in becoming a client, we don’t push them. We help them, and let them know how they can contact us if they’re ever interested in our services. We do this on a normal basis, and we have our doors open (figuratively, since social distancing is still the norm at this time), with the expectation of helping people make sense of their situations.
Even if your adviser has closed their practice to new clients, they should be offering to help people you care about during this time of crisis. We’re all in this together, and your adviser should be willing to share their time and expertise with the people you care about—even if they might have to charge a fee to do so.
This is a tough time. This could be one of the toughest economic challenges that we’ll face in our lifetimes. Which makes it even more important that your financial advisor do more than just be there. These are the times where financial advisors earn their keep, and their clients’ trust.
If you are one of our clients, I hope you will agree that at Lawrence Financial Planning, we have done these things. If not, please let us know what we can do to provide more value to you during this time. And if you’re not one of our clients, then use this article as a checklist of expectations for your current adviser. As always, if you’re interested in learning more about our services, please contact us to get started.