Should the Pandemic Change Your Financial Plan? | Podcast
Featuring
An Adviser You Can Talk To Podcast

Should the Pandemic Change Your Financial Plan?

Subscribe
format_quote

I know right now: In cash, I’m earning zero. And no plan is going to be achieved [if I’m] earning nothing.

Rick Winters, CFP®, CRPC®, AWMA®

Vice President, Portfolio Manager

With the pandemic bringing profound changes to the way we all live and work, it’s natural to wonder if it should mean rethinking the way we invest, too. That’s certainly been something on the minds of the Adviser Investments financial planning team. This week on the The Adviser You Can Talk To Podcast, Andrew Busa and Rick Winters sat down to talk through how the pandemic has changed the way they work as advisers, the advice they’re giving clients and how to know if your investment strategy now needs to change.

Topics include:

  • Importance of understanding each client’s unique circumstances
  • Reviewing old plans in a new context
  • Being disciplined and thoughtful about change
  • Not letting present anxieties derail future plans

New risks bring new worries—but some old-fashioned planning and perspective can help. Click play to listen now!

Featuring

Episode Transcript

Andrew Busa:
You know us as the adviser you can talk to, but what does that really mean? In today’s episode, we want to show you how our conversations with clients and coworkers have changed, or not, as a result of this global pandemic. Hello. This is Andrew Busa, and I’m a financial planner here at Adviser Investments. We’re here with another Adviser You Can Talk To Podcast, and today I’m joined by my colleague Rick Winters. He’s a portfolio executive and vice president here at Adviser Investments.

Rick Winters:
How you doing, Andrew?

Andrew Busa:
I’m doing well. So you know, Rick, today’s episode, we’re going to treat a little bit differently. I want to just use this as a time to have kind of a casual conversation with you. And I know the term “unprecedented” is being thrown around a lot these days. But, you know.

Rick Winters:
Truly.

Andrew Busa:
Call it unusual, new, uncertain. Whatever term you want to use. But I think that clients out there would like to hear from us and you, in terms of just how our roles as advisers have changed, if at all, during these times. I wonder if you can kind of speak to that, and-

Rick Winters:
Yeah. So, I’ve been looking forward to this, because I think as I spend a lot of time talking with people on a very personal way about their finances and their family, this has added a whole other dynamic to that. I mean, one of the biggest changes. .. And that’s of course why you and I are talking. We’re not looking at each other, but fortunately, because of technology, able to do this as if we were sitting in the office. But yeah, I’ve been home since March 11. Right? Yeah, it’s been a work in progress. The kids have been out of school. I think that I can speak for myself and many of my colleagues when I say this. That has been a … The teacher/janitor/lunch lady and principal without any authority is a pretty tough job to have.

Andrew Busa:
Yup. I think everyone out there is wearing a lot of hats.

Rick Winters:
Yes, exactly.

Andrew Busa:
Everyone can attest to that.

Rick Winters:
So, that’s one major change. Fortunately for us, living in New England, we had kind of anticipated the fact that we might need to work from home one or two days because of a big snowstorm, but that investment in technology basically allowed us to hit the ground running. So, hopefully the people we’re working with have not seen much of a change, even though we’re all … Well, I guess just in case my kids bump into this conversation, that’s one of the changes. My kids get to join occasionally in saying hi to somebody.

Andrew Busa:
Right? Yeah, I mean—

Rick Winters:
But for the conversations that we’re having, I think that’s what you’re actually trying to get at there, Andrew, was the conversations with clients.

Andrew Busa:
Exactly. I mean, when you’re having these conversations with clients now, you know, we’re in the middle of this global pandemic, of course. I’m curious what sorts of questions you are getting from clients, as you’re having these sorts of conversations?

Rick Winters:
So, think about where we’ve gone, where we have been, and where we are now, is that in a matter of four trading days, we watched the market shed off 13% right after the market had peaked just a week earlier. And then quickly thereafter, within a month, we watched the market on the worst day be down over 30%, market being the S&P 500. That generates quite a bit of emotion. And then a week after that, the markets recovered from that bottom by about 20 plus percent.

Andrew Busa:
Right.

Rick Winters:
So, there’s been conversations where I’m having, where you’re dealing with the anxiety that’s being created from the downside experience, and then the surprise that a market, you know, the stock market is trading at these higher levels that we’re seeing right now.

Andrew Busa:
Right.

Rick Winters:
So I think that, initially, with that surprise that they have, has generated a unique set of conversations, actually.

Andrew Busa:
Absolutely. And you mentioned a key word there, anxiety. I think what I would say—and I’ve been part of some of these conversations as well with clients—is it’s a legitimate fear that I think a lot of people have, of what exactly is happening with the stock market, why is the stock market going up, why is it going down some days. I mean, these are normal questions to be having and feelings to be having. You know?

Rick Winters:
We’ve spent 25 years walking through those exact conversations. “Why does it go up? Why does it go down?”

Andrew Busa:
Right.

Rick Winters:
Well, fortunately, over the long run, it makes a lot more sense than the day to day.

Andrew Busa:
Right. And so, what kind of advice do you think has been prominent in these conversations that you’ve been giving to clients?

Rick Winters:
Yeah. So I think the key, when someone calls you, and whatever emotions there are, don’t assume anything, because we know what assuming can do to the person making that assumption. So I ask them questions. I say, “Hey, what’s your situation? Where are you at, and how’s the family, and what are your interactions, and what’s been going on for you?” Each of those experiences is unique. One, because we have clients in all 50 states throughout the U.S., in different parts of the world, so there are actually legitimately different experiences happening.

Rick Winters:
But then we move on to, “Okay, what’s changed for you personally?” And when I mean changed, I’m not just like, “Today I woke up, and I felt different.” It’s, “What’s changed financially for you? Healthwise? More of a lifestyle change? Or maybe something external?” Maybe somebody close to you, or family or otherwise has impacted you. So, I want to understand those things up front, because starting there allows me to move into what we’ve spent with these people, so much time. My friends. The relationships I have with my clients that we’ve spent all this time building these plans. So as long as I come in with my eyes wide open, that maybe nothing’s changed, actually. I know the situation is odd, but maybe the actual nothing has changed. So, what do I… Do I really need to come in and now make some massive adjustment to my portfolio, because I woke up today and read a bad article?

Andrew Busa:
Right. No, I think that’s a good point. I mean, I think as you approach this sort of global event that’s a shock to a lot of people’s portfolios, I think really what stands out, too, is just the importance of having a plan. Because it’s much easier to view this sort of event in the context of a broader plan that you have for yourself, rather than zooming in into what’s happened in the last two months, right?

Rick Winters:
Yeah, exactly. I just spent 10 years building this plan with this person, and all in one day, it’s somehow going to change, if… You know, let’s go to the extreme. “The market’s are going to decline. They’re going to only go down from here, and I need to protect my money.” Well, okay. How did we get here? What have you been listening to? What’s kind of gotten it to this point? Obviously, the news media is feeding in, and the politics surrounding it, and our personal experiences. But we need to stop. We need to first think rationally. We need to be disciplined, because we have spent time building this plan for this exact situation. And then we need to educate ourselves.

Rick Winters:
So, a quick knee-jerk response, by saying, “Hey, I’ve got to go half in cash or all in cash,” is actually setting yourself up for a failure. One, because now our plan has been basically crumpled up and thrown out the door. And the other one is, it’s going to just shift your risk. You didn’t get rid of risk. You just changed it. You now are in a position where you’re going to earn zero, literally.

Andrew Busa:
Right. Yeah. I mean, I think you speaking there to just the importance of the education part of your relationship with clients. How important that is, to really just let clients know what the impact of their decision will be not just tomorrow, but 10 years down the road. But then I imagine sometimes, though, a client comes back to you and says, “You know what? I don’t care. This is the decision that I want to make.”

Rick Winters:
Yeah.

Andrew Busa:
How do you deal with that sort of situation?

Rick Winters:
Yeah. So, if we are in that point where we … sometimes we do need to make a change. Just because you haven’t had a financial change or a health change, maybe you’re not sleeping at night. Well, that’s not okay, either, because that creates a lot of its own issues. So, first things you got to do is, because the plan is built with the idea that I have money that’s invested to pay bills 20 years from now, and my plan also has money that’s built to pay bills tomorrow, or today, or right this minute. How do I differentiate when all I get is a statement at the end of the month, that shows me my $500,000 account is now worth $450,000?

Rick Winters:
Well, what you do is you can actually look at that account and say, “Well, I’ve actually built in $250,000 worth of safe money.” And maybe the portfolio is, I’m using $500,000. Maybe we’re talking about $5 million. So, maybe the $5 million account is now $4.5 million, and that’s $500,000 that seems to have just vanished in thin air. But then maybe I’m talking about you having $2.2 or $2.5 million in safe money. How long does it take you to spend that?

Rick Winters:
Then you stop for a second and you go, “Well, I’m spending $50,000 a year, and I’ve got my Social Security coming in, and okay, I’m not going to get that little side job money that I was getting before, but oh, no. I think that safe money could last me 15 years, and without having to dip into stocks. So, am I really concerned about the stock market 15 years out from now?” Personally, I’m not. I’m eager to see where it actually goes from here, because as a long term investor, looking in the rear view mirror, 10 years from now I’m going to say, “Wow. I mean, I’d never want to relive that COVID-19 experience, but that was the best buying opportunity, as a clear thought-ed investor, that I took advantage of. Didn’t make a drastic decision, and then long term, made my money that I thought I was going to make.”

Andrew Busa:
Yeah. I know one of our mantras here is that a bear market is a fantastic buying opportunity, and one to be taken advantage of.

Rick Winters:
I’m going to totally steal this joke right from our investment committee meeting, is saying that every past market decline is looked at as a missed buying opportunity, and every future market decline is nothing but risk.

Andrew Busa:
Yeah. I mean, well said at that. What more do you need to say there? All right, so that’s all well and good there. But let’s say the client says, “You know what? I get all of that, but this is still a decision I want to make. I want to put a slug of my portfolio in cash.” How do you deal with that sort of situation?

Rick Winters:
Yes. So, now we can get to… And that’s the right question there. Because that does happen, and what we’re going to do is we’re going to think about with that person… And maybe we do need to take action. But the idea of there being one only extreme solution, as if I’m invested one day, and now I’m in cash the next, that absolutely does not work. I just touched on that before, because you go from being in a position to make, I don’t know, 4% or 5%, maybe, over the long run? Maybe if you’re really eager, and taking on a lot of risk, maybe 10%? Maybe? But I know right now in cash, I’m earning zero. And no plan is going to be achieved earning nothing, especially if we start to deal with other things like inflation.

Rick Winters:
So, we need to take action. Let’s not scrap the blueprint. Maybe we move the windows. Maybe we adjust a wall, and we change the paint color. So, we go from being someone that’s invested 60% in stocks, which is pretty traditional for a long-term investor with enough resources to kind of protect near-term interests and long-term growth. Maybe we go become a little bit more conservative temporarily, but we don’t throw the whole plan in the garbage. We have a place to operate from. We’re on our toes. We’re not on our heels. If I’m in cash, I’m on my heels. I’m constantly looking around. I’m not in an offensive position, if I’ve sold as the markets have declined a lot. I’m in a defensive position, because I’ve got to figure out how I’m going to get back in, and it’s a very hard decision to make. So, I say keep the plan intact. Work with the blueprints. Don’t scrap them and start all over.

Andrew Busa:
Yup. Love that analogy. I think there’s a lot of merit to that. You know, shifting gears a little bit here. As we got the notice at Adviser Investments that we’re working from home. You know, we’re adapting now to this new lifestyle at the beginning of this pandemic. What were your expectations, working with clients and your coworkers? Has it been different than you expected? How has it been overall for you?

Rick Winters:
I’ve actually been really impressed with my coworkers, because everybody stepped up to the challenge. And we’re doing a lot of fun things to try to stay connected. Just the other day… Thank you, Andrew, for organizing this… was our baby-picture-reveal project competition.

Andrew Busa:
That was fun.

Rick Winters:
To see who could guess all the… You know, kind of keep the culture of the firm intact. And I think we’ve done a great job with that. We haven’t missed one meeting. We haven’t missed a beat. A lot less people taking vacation right now. I noticed that we’ve got everybody, all staff, all hands on, pretty much. We’re going to have to start making sure we keep ourselves relaxed enough to keep going.

Andrew Busa:
Yup.

Rick Winters:
But for clients, I’m equally impressed. I think we’re fortunate to work with a very smart group of people who have, from our roots coming in, from being writers of advice, and through the newsletters, and continuing to write and communicate at an extremely high level… I hope I’m meeting the bar that we’ve set with this podcast… I think that they’ve come in, and for the most part have committed to this idea that there’s a plan, and if we operate rationally, maintain our discipline and continue to educate ourselves, we’ll come out okay on the other side. And that’s absolutely what I’ve seen. A lot of my conversations doesn’t get down into immediately any performance discussion. It’s just checking in, to see how each other’s doing, and see what’s changed, as I highlighted before. That, I think, is most important. I give our clients so much credit for being that way, and knowing, being that seeker of information, having found us and given us a chance to help them through environments like this.

Andrew Busa:
I totally agree with that. I think the conversations that I’ve had with clients, and coworkers, for that matter, I have been very heartened to see just that the human element of all of this hasn’t been lost, and I think the conversations that I’ve been a part of have just been very rewarding, I think, with clients and coworkers. I feel like all of the calls sort of end with a, “You know, it was great to see you, great to keep in touch. Good to see you’re doing well.” I think that can’t be overlooked in times like these.

Rick Winters:
Yeah. No, it can’t be. It’s so important. It lets us continue to be… And I really want people to think about, we’re in an environment where you want to be on your toes, so that you’re ready to respond proactively and actively, rather than just kind of feeling like every day is just another, kind of, pushing you backwards.

Andrew Busa:
Right.

Rick Winters:
That’s not a way to function. It’s, fortunately, where I feel like Adviser Investments is, we’re on our toes.

Andrew Busa:
Yeah, I totally agree. I think backed by our research team here, all the portfolio executives, financial planning, operations… The IT department have been phenomenal. Everybody. Like you said, it’s been all hands on deck, and we’ve been really enjoying our conversations with clients. You know, helping you out there as the listener just sort of get through these times, and we’re right there with you.

Rick Winters:
Mm-hmm (affirmative). Yeah. Absolutely.

Andrew Busa:
So Rick, any thoughts for the listeners before we leave?

Rick Winters:
I think I’ve exhausted myself in sharing my opinions and thoughts on this, but I’ll give one last shout out to our whole team, and that includes our clients, as this has been a really difficult time, and us all working together is where we’re going to come out on top.

Andrew Busa:
Yeah, I agree. And shame on me. One department I left out here, the marketing department. Putting out these podcasts, working on these podcasts. They’ve been absolutely amazing.

Rick Winters:
Yes.

Andrew Busa:
You know, putting out these podcasts week by week. These are a lot of work, and they deserve all the credit in the world for the high-quality work that they’re doing.

Rick Winters:
Making you and I sound good is not an easy task.

Andrew Busa:
Absolutely. No, it’s not. It’s not. Yeah. So, on that note, this has been Andrew Busa and Rick Winters from Adviser Investments, thanking you for listening to The Adviser You Can Talk To Podcast. Again, if you enjoyed this conversation, please subscribe. Review our episodes and our show. We really appreciate that. You can check us out at www.adviserinvestments.com/podcasts. Your feedback is always welcome, and if you have any questions or topics that you’d like us to explore, please email us at info@adviserinvestments.com. Thanks very much.

Show Full Transcript

Additional Wealth Management Resources

Article

Having Money Conversations With Your Kids

July 7, 2023
Clients tell us they worry about how wealth will impact their children. Some fear that being open about wealth may have a negative effect on their kids’ ambition and work ethic.
Yet transparency and having money conversations with your kids are an important part of estate planning and wealth preservation. And it …
Read Morekeyboard_arrow_right

This podcast is for informational purposes only. It is not intended as financial, legal, tax or insurance advice even though these topics may be discussed. Information and events addressed in this podcast, as well as the job titles, job functions and employment of the podcast’s participants with respect to Adviser Investments, LLC may have changed since this podcast was released. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions..

The Adviser You Can Talk To Podcast is a trademark of Adviser Investments, LLC. Registration pending.

© 2023 Adviser Investments, LLC. All Rights Reserved.