Vanguard CEO Tim Buckley spoke encouragingly about the world’s response to the outbreak of coronavirus that has left much of the global economy in stasis or dying on the vine.
While there were reasons to worry or despair, Buckley noted in a Thursday Vanguard roundtable discussion that billions of people cooperated to disrupt lives, close schools, cancel events, work from home and otherwise isolate themselves just to keep each other healthy and safe.
“I think we’ll remember those great moments more so than the really challenging ones,” said Buckley. “This has been one of the most encouraging years of my lifetime.”
But Buckley also believes that “challenging times are ahead” for markets and the economy, and investors will be relying on their financial advisors to see them through the problems.
The Value Of Advice
Advisors have already demonstrated some of that value to their clients, said Tom Rampulla, managing director of Vanguard Financial Advisor Services, by keeping them away from timing the markets. Trying to time the U.S. stock market bottom, which happened on March 23, could have prevented clients from enjoying the recovery rally that occurred in subsequent months, he said.
This value was demonstrated when advisors were forced to adopt virtual communications to help clients stay on course, said Rampulla. “You had to engage with clients to protect them. I’m blown away by the adaptability of the business model,” he said.
Rampulla said that about $2 trillion of Vanguard’s $6 trillion assets come from the recommendations of financial advisors.
“Just being there for clients is really important,” he added. “Advisors can serve clients best by being their emotional circuit breakers. Be present. Reassure them.”
Rampulla noted that advisors will have to treat newer clients differently from older, well-established clients. While established clients are likely to reach out to advisors when market or economic concerns arise, advisors will need to be more proactive and reach out directly to newer clients who may be reluctant to initiate contact.
Technology Is Ascendant
Of course, during the Covid-19 pandemic, most of this communication will have to occur virtually using technology, said Buckley, affirming the industry’s long, slow move towards adopting virtual models of providing advice and managing firms.
“They [virtual models] will probably take off coming out of this crisis,” said Buckley. “They were adopted by advisors to help them scale better, but now virtul models are being accepted by the broad consumer out there.”