There is little good news on the horizon for advisors or their clients for the remainder of the pandemic crisis, according to Ric Edelman, founder of Edelman Financial Engines, one of the the nation’s largest independent financial planning and investment advisory firms.

Advisors need to warn clients that the worst is not over and more bad economic times probably are coming, despite the current upsurge in the market, Edelman said in an interview with Financial Advisor magazine.

“Advisors need to acknowlege that this pandemic may last longer and may be more severe than most people anticipate and that some of their clients may not be able to remain fully invested in their current portfolios,” he said.

Edelman discussed the contents of a report he authored that was released Monday: "The Long-Term Financial Impact of Covid-19 and What It Means for You." He encouraged advisors to have conversations with their clients warning about potential future problems.

“Advisors should be talking to clients about whether they have the financial wherewithal, as well as the emotional wherewithal, to maintain their portfolios for as long as this might last,” he said. Some of his clilents are opting to put more funds in cash reserves and lessen their holdings in equities so that they are not forced to sell stocks when prices are down. “It is better to make that determination now than after the market falls again. Taking a cavalier attitude toward the pandemic is not advisable.”

The stock market has rebounded for now, but investors are “behaving euphorically [and] should dampen their enthusiasm,” he added.

“Americans without a sound investment strategy often fall victim to behavioral finance biases that cause them to make bad decisions,” Edelman said. “Covid-19’s impact on the economy has been and will continue to be unprecedented. Americans are an optimistic bunch, but optimism is no substitute for honest evaluation, and hope is not a financial plan.”

Edelman told investors, “Those who expect a return to ‘life before Covid’ are destined for disappointment. Just as air travel was never the same after 9/11, life will never be the same after Covid-19. In many respects, life will be better. But for many Americans, because of their lack of preparation or unwillingness to adapt to life in a post-Covid world, it will be worse.”

The pandemic will have an effect on all aspects of life, Edelman explained, and “until a vaccine is widely distributed, the economy is not likely to fully recover.”

The report cites numerous authorities to buttress its conclusions.

The Congressional Budget Office said the downturn will last through the end of 2020, with the economy likely 5.6% smaller in the last three months of 2020 than it was a year earlier.

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