When Federal Reserve Chairman Jerome Powell recently commented that the U.S. economy is at an “inflection point,” with a brightening outlook and renewed potential for rapid growth, he sounded a note of optimism we’ve all waited a long time to hear.
Over the past year and a half, we’ve faced office and school shutdowns, job losses, widespread closures of small businesses, pivotal national elections, multiple economic stimulus packages, tax changes and the rollout of the Covid-19 vaccines, all of which impacted stock markets and the economy.
While the global outbreak of Covid-19 affected nearly every aspect of our lives, it also presented unique challenges and opportunities for the relationship between financial professionals and their clients. As social distancing required us to transform our homes into places for family, school and work, simultaneously we adapted to ad-hoc office spaces, virtual “face-to-face” meetings and increased reliance on technologies to keep us connected professionally. I’ve been amazed at how quickly our team of financial professionals have adapted to and thrived in this new reality.
Our clients have also shown resiliency during these unprecedented times, and it is especially gratifying to see them start to make plans and safely venture out again for family reunions and other long-overdue events. As our clients look to the future with renewed optimism, it’s clear that working with a financial professional who can help them plan holistically has become more vital than ever, and I believe the mission of our industry has never been more important.
For financial professionals, the key is to continue focusing on three fundamental areas with their clients.
Securing The Income Needed For A Prosperous Retirement
The lessons of 2020 have underscored the need for financial products with equity protection and guaranteed income. We can’t predict market volatility and economic instability. But we can and should encourage and help clients to view insurance as an asset class and as an essential part of a diversified portfolio. For example, some annuity features and benefits offer ways to continue participating in market upside while reducing risk. Other types of annuities can be effective tools in offering investors downside protection along with income guarantees.
For clients who are hesitant about fully participating in the stock market if they are near retirement, these are effective ways to reinforce diversified portfolios and support a long-term investment strategy. Additionally, protected equity, in the form of a registered index-linked annuity, is a reliable option to manage the need for yield in an extremely low-rate environment.
Investing For The Long Term
Today there is no one-size-fits-all financial plan or investment strategy. Clients require personalized and holistic wealth management strategies to help them achieve their financial goals. Equitable has a long history of designing innovative investment products and strategies to match our client’s needs, whether they are at the beginning or later stages of their financial journey.
We all know the importance of forming adaptive financial plans that maintain a broad view of the economic landscape, keeping a steady focus on the bigger picture rather than reacting to daily events and headlines.
It is vital to remind clients that attempting to guess or time the market is challenging and, more often than not, subject to emotional decision-making during low points. For example, our research found that an individual investing $10,000 in the stock market in 1969 would see their investment grow more than 100 times to approximately $1.4 million by 2019. However, if an individual had tried to time the market and missed just the 10 best performing days in that 50-year span, their investment would have only grown to $680,410—about half of the return. As financial professionals, we can enforce the tried-and-true notion that the longer one stays invested, the greater potential one has for strong future returns.