A Great Question to Ask Your Financial Advisor

A Great Question to Ask Your Financial Advisor

May 07, 2020

So how are we doing?  It is a common question from clients these days with multiple responses depending on the underlying meaning of the question.  As a wealth management firm, the “we”, usually translates into, “how is our portfolio doing?”  We also hear comments like, “how is the market doing?”  “The market is really not doing well” “The market is kicking people in the teeth”.  Remember, “the market” is a very broad term, especially depending on which part of the market you are referring to.  While the market in the most general terms can affect how any wealthy family feels in the short term, the market has always recovered after every single major event over the past 80 years, sometimes quickly, sometimes not as quickly.

Don’t worry, we won’t go into the typical investment speech of “keep a long-term horizon”.  We understand that it is human nature to focus on the short term in the middle of a crisis.  It is a time where everyone wants to reassure themselves that their financial advisors are “on top of the situation”, that they are working as smartly as possible to mitigate the short-term pain without sacrificing the long- term gain.

As wealth advisors, we work within the myriad of scenarios that need to be considered and managed through, including explaining the most recent tactical changes that are made under the premise of keeping the short term pain to a minimum without losing sight of long term performance and long term goals. 

So, todays advice to all wealthy families is this:  Consider asking your financial advisors a different question.  What about asking the question, “how are current economic conditions going to affect my financial plan and the strategies that support it?”  It is a better question when you think about it.  It takes much of the emotion out of the question because at the very core, a financial plan is long term, not this week, this month, or this year.  The question allows for discussion on the strategies that support the plan like U.S investing vs international, growth stocks vs value stocks, large cap stocks vs small cap stocks, low volatility alternative strategies, municipal bonds vs government agencies, treasuries, or CDs just to name a few.

Will this new question make investors less nervous while in the middle of something like a pandemic?  Hopefully yes.  Try it next time you speak with your financial advisor.