Of course, they would be better off selling before the correction but trimming things so that they can sleep better is not a mistake, as long as they still have a plan that works. It’s the difference between proactive risk control and reactive panic control. It’s the difference between a market-oriented advisor and a client-centric financial planner.
In early February, with headlines translating the market’s drop into trillions of lost value, it would be easy to become concerned when one’s financial standing was still sound. If this recent correction doesn’t trigger a reassessment, it is probably only a matter of time before another one does.
Now is a great time to see if clients are still in touch with the “why” of their plan. They’ll need that reference point when the bear returns if not sooner. Understanding how their portfolio is constructed to support those goals and manage the inevitable trade offs allows them to recommit to their plans and can help them stay grounded.
It is easy to stick with a plan when all is going well and markets only seem to blip. But, the bear is coming. Now is the time to make sure your clients and their plans are prepared for it.
Dan Moisand, CFP, has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. He practices in Melbourne, Fla. You can reach him at www.moisandfitzgerald.com.