Overcoming Watershed Events: CFP® Professionals Help Consumers Navigate Troubling Times

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The dotcom bubble. 9/11. The Great Recession. What do these watershed events have in common? They all generated economic uncertainty and instability in the financial markets.

And now the COVID-19 pandemic — a public health crisis which has resulted in a severely contracted economy and volatile markets — has consumers on their heels. Too often, events like COVID-19 can cause savers to take rash action as they see their account balances dwindle or are just generally fearful of the unknown.

These moments of national crisis have shaped the careers of longtime CFP® professionals, who are uniquely equipped to bring clarity and peace of mind to clients worried about losing it all. Here’s what CFP Board’s Ambassadors had to say about how their experiences during past crises prepared them for COVID-19.

You're Going to be OK and Here's Why

“We are creatures that have developed on a planet that is hostile,” says Lynn Ballou, CFP®, senior vice president and partner with EP Wealth Advisors, who has worked with clients through periods like the dotcom bubble and the 2008 financial crisis.

“Humans react seven times more impactfully when presented with negative events or information than when presented with positive information,” she continues.

She argues that it’s very difficult to overcome this emotional instinct, but fortunately financial planners have developed tools to help take emotion out of the equation.

“In situations like we’re in right now, we can go to our clients and strip out the emotion by asking them to differentiate between their needs and their wants. We then create a mini-plan based on their needs and show them what’s statistically likely via a stress-tested analysis of their current assets. Some people are shockingly surprised when they just focus on what they need, not what they want.”

Marguerita Cheng, CFP®, CEO of Blue Ocean Global Wealth says that this process of evidenced-based reassurance is really important.

“It’s not enough to just tell a client they’re going to be fine because it can sometimes create a sense of toxic positivity. We need to be saying you’re going to be OK and here’s why.”

Downturns are Features of Markets, Not Bugs

Over the 22 years of her planning career, Cheryl Costa, CFP®, Founding Principal of Woodside Wealth Management LLC, estimates that watershed events have happened four or five times.

She argues that investors should be prepared to expect these types of declines if they are invested in the stock market and that the average investor should not be trying to avoid them.

“They are features of the market, not bugs, and you need to be able to stay invested in order to receive the long-term benefits of equities exposure,” Costa added.

Costa points to the rebounds that occurred shortly after 9/11, the 2011 flash crash, and the 2015 flash crash as evidence of events that investors need to withstand, but not react to.

She likens it to a roller coaster ride: “The only people who get hurt are those who want to get off early.”

The COVID-19 Moment

Laura LaTourette, CFP®, founder of Family Wealth Management Group, worked as a financial planner through the bursting of the dotcom bubble, 9/11 and the 2008 financial crisis.

Despite the obvious pains of 2008, LaTourette was proud to say that many of her clients were able to, with time, overcome the loss which gave her the confidence when the pandemic struck the U.S. in March, to say “I’ve been here before and I’m not afraid.”

“Because I was able to see my clients recover from such hardship during the great recession, I was in a position to say confidently to my current clients who had concerns in March that ‘I’ve lived through this before, just hold my hand and we’ll get through it.’”

However, the current moment has presented some challenges.

With the explosion of social media in the years since the 2008 financial crisis, many advisors have found themselves battling against information their clients find on the internet. The pandemic has made this aspect of the job even harder, says Charles Weeks, CFP®, Founding Partner at Barrister Wealth Management.

“We’re often dealing with misconceptions related to health content that are designed to prey upon our older clients’ fears. A lot of our clients are active on Facebook and will call us with things that are completely off the wall, so we’re trying to find and send as much vetted information to our clients as possible.”

Planning is More Than Just Investment Management

A hallmark of the financial planning profession is that it’s not solely focused on managing investments, but takes a broader view of a person’s entire financial situation. That has been an important differentiating factor during the COVID-19 pandemic, when many investments have rebounded while client income has withered due to furloughs, promotion moratoriums and, in some cases, permanent job loss.

“I’ve been making a lot of calls to clients to check in and say, ‘I just want to make sure you know that I’m here for you and your family,’” says Cheng.“

As a result of one of these conversations, my client told me that she was recently furloughed and struggling to file for unemployment for her state, so I went through the application process on her behalf and was able to secure her income.”

For many other clients, they sometimes just need the counsel of someone who’s been there before, says Weeks, citing a recent example.

“A client really concerned about the pandemic, called me saying that this one — meaning the uncertainty of this event — is different. I told him that while this may be our first truly global pandemic, this isn't the first crisis we've dealt with and it certainly won't be the last.”

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