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.

The report said, according to the Federal Reserve, 110 million Americans entered the crisis with credit card debt, and CreditCards.com said 23% of credit card debtors have added to their debt as a direct result of Covid-19. Forty percent of U.S. households were living paycheck to paycheck before the crisis began, according to the Fed, meaning job losses have prevented many from paying their rent or mortgage bills. Thirty-one percent of American households did not pay their rent in April, according to the National Multifamily Housing Council.

Renters and landlords are not the only ones at risk. The situation is also dire for homeowners. More than 3.8 million U.S. households did not pay their mortgage in April, or about 7% of all home loans, according to the Mortgage Bankers Association.

According to Moody’s Analytics, the commercial vacancy rate is 17%, which is the highest since 1991, and it will rise to 20% by the end of the year. In the past 10 years, investors spent half a trillion dollars to construct office buildings and nobody knows how much of that space will be needed when people return to work.

Many people are not likely to regain their employment soon, the report said. More than 40 million people filed for unemployment from March 1 through May 29, according to the Department of Labor, amounting to a 17% unemployment rate, a level not seen since the 1930s. The Economic Policy Institute says the actual number of people who have lost their jobs is even higher at 55 million because the DOL counts only those who have filed for unemployment benefits.

Everything from agricultural businesses, to states and municipalities, to higher education will feel the negative effect of Covid-19, the report said.

“The economy in this crisis may fare worse than it did during the credit crisis 12 years ago. It may even be worse than the crisis the nation experienced in the 1930s,” the report said, “Already, corporate bankruptcy filings have increased 26% from a year earlier, according to Epiq Global, with many more filings to come.”

In addition, the report said, Covid-19 exacerbated what was already a deep and growing national crisis: America’s lack of retirement readiness. Prior to Covid-19, the amount of money saved for retirement by U.S. households was $3.7 trillion less than what was needed for them to avoid running out of money in retirement, according to the Employee Benefit Research Institute.

All of these negative effects are playing out even as the stock market is rebounding. The report explained stock prices do not reflect the health of the economy, and stock prices can rise in the midst of a major decline. Over the years, 20 of the biggest daily percentage increases for the Dow Jones Industrial Average have occurred during major bear markets or crashes.

Within all the bad news, the report held out hope that investors can overcome their  financial biases and invest wisely. The report stressed the need for investors to acknowledge the harm the virus is doing to the economy and face the dangers inherent in the stock market.

The report also outlines what investors need to do now to protect themselves, such as confirming with an independent third party that their portfolios are properly diversified based on each individual’s personal circumstances. In addition, investors need to realize their risk tolerance may be different now than it was during the 2007 to 2009 crisis since they are now 12 years older and closer to, or in, retirement, the report said.