8 things financial planners tell clients when they call in a panic

financial planner and client

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  • We're all under financial stress these days, even if our employment has remained steady during the coronavirus crisis - watching your investments lose value is not easy.
  • We asked financial planners what they tell their clients when they call in a panic, and they offered nine pieces of advice we can all use.
  • Remembering that we've come through past market drops, staying on track with long-term investing goals, focusing on family instead of financial stress, and keeping your emotions out of your investment decisions are just some of their tips.
  • SmartAsset's free tool can find a financial planner to help you take control of your money »

These days, with the United States newly placed at the center of the coronavirus pandemic, it feels like panic about the virus is spreading nearly as quickly as the outbreak itself. Hospitals and medical personnel are under unimaginable strain, businesses are shuttering, the markets are vacillating wildly, a record 3.3 million Americans filed for unemployment last week - and that's just the tip of the bad news iceberg.

Not one of those issues is one we can resolve simply, but we do know some experts who can help out with the financial anxiety aspect. In the face of all this uncertainty and fear, we asked a handful of financial planners for the advice they've been dishing out to the clients who've called their offices in a panic, and their sage words already have us breathing a little easier.Advertisement

There's a lot to be fearful about, but more than almost anyone else, these folks are familiar with the vacillations of the market. So if they're telling us it isn't time to panic about our investments, it's safe to believe them.

1. Remind yourself that we've come through similar situations in the past

"This time is tougher than ever because I can't just tell clients to get on with their normal lives while this resolves itself," said Lynn Ballou, Certified Financial Planner (CFP) and senior vice president and partner at EP Wealth Advisors, who's been reminding her clients of the resilience we all learned from the 2008 recession. 

Said Ballou, "The good news is that it wasn't that long ago that we faced another global financial crisis, with lessons learned about the importance of global collaboration and decisive solutions with quick implementation." She noted that in just the past two weeks, the Federal Reserve has been using all the tools in its arsenal to fast-track a recovery. "Despite our impatience and an imperfect response by our government, they are actually moving at fairly historic speed to provide the economic support that's their part of the equation."
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Before panicking, Kristen Euretig, CFP and founder and CEO of Brooklyn Plans, also instructs panicking clients to take a look back into history to calm their nerves. "The world and markets have been here before, and we will be here again. We always get through it, somehow, some way," she said. "Americans are resilient and ingenuitive - so many new services, apps, and all-around disruption to the finance industry came out of the last downturn. I suspect the same will come to pass with this one."

2. Focus on family

Wealth Hacker Labs founder Jeff Rose, CFP, knows that sometimes, the hardest thing to do is nothing, so he emphasizes the long term for his clients. "Remember your plan on what your goals are. Have those changed? If not, then stay the course and focus on the things you can control.  One of the simplest things you can control is how much news you consume. Filter out the noise and negativity and focus on the things that matter most: like family." Marguerita Cheng, CFP and CEO of Blue Ocean Global Wealth, has a similar message, instructing her clients not to miss the forest for the trees. Yes, it's a scary time, but it's also an opportunity to spend quality time with the very people you're saving for in the long term.Advertisement

"For me, I'm reassuring clients and allowing them to appreciate this time for themselves, as well as friends and family," she said. "I encourage them to develop a routine to provide some consistency, which will help them both in and out of the market. Provided your investment allocation is consistent with your time horizon, goals, and objectives, don't switch or ditch - or you won't give your portfolio the chance to recover."

3. Don't bury your head in the sand

Also important for Ballou? A refusal to shy away from the numbers, however dire they may seem. 

"They say the truth will set you free. I have been holding live webinars with clients so we can view their accounts and tie the new values into the financial plans we have built over our years working together," she said. "By looking at the reality of the numbers, we can battle fear and panic and focus on real steps we can take to still meet our goals and life objectives."Advertisement

4. But don't try to outthink the market, either

As the founder of Beyond Your Hammock, CFP Eric Roberge knows that no one can predict the market, and he tries to instill that mentality in his client base by encouraging them to stay put. 

"Moving in and out of the market is a losing game over the long run. Sometimes a prediction will align with what happens, because that is how chance works. Make predictions long enough, and eventually a few of them will be right. But if timing the market was that easy, everyone would be out there doing it and there would be no losers. In an effort to avoid what you perceive as risk - i.e. a market downturn - you're actually taking on more risk by trying to time when to jump in and out."

5. Bear in mind that we aren't coming into this situation empty-handed

It's important to remind ourselves of the tools we have coming into this situation, Ballou explained: "I like to remind clients that this is a health crisis with economic impact, and that we went into this with an incredibly strong market and economy. And of course, one of the best lines from a song applies here: 'I get knocked down, but I get up again!' That we do, and that we will."Advertisement

6. Keep emotions out of it, because this is what you planned for

This is one of those situations where Roberge feels you shouldn't react with your gut. "When emotions run high and markets start to get choppy and volatile, a good plan often gets thrown out the window for what feels right in the moment. Markets reward discipline and that is why so many investors fail."

Similarly, Cheng redirects her clients' nervous energy back to their own accounts, which have been shored up for exactly this reason. "I remind clients of the difference between savings and investments. Cash reserves are short-term instruments such as checking, savings, money markets, and CDs, etc. The goal for these accounts is principal preservation, but investments can and do fluctuate in value. I tell them that it's certainly acceptable to be concerned, but don't panic or react. It's as unwise to panic sell in the financial market as it is to panic buy in the supermarket." 

7. Lean on your bridge accounts, and leave your long-term savings as a last-ditch option

To reassure clients, Cheng directs them back to what she calls the "bridge account," a concept she tries to make sure all of her clients are familiar with. "I talk about the different buckets of money: short-term, which provides access to maintain their standard of living, intermediate - what I often refer to as a 'bridge account' because it's not cash reserves and it's not college or retirement - and long term, savings for retirement and college. When investors can see they don't need to sell investments for immediate needs, they often feel more comfortable staying invested for the long term."Advertisement

Euretig also stresses that it might be best to take a break from checking your account balances for a while, even if you're set to retire soon. "Don't worry today about your retirement account balance. People get alarmed by the total balance change in value, but I tell them to remember that even in retirement, you have a good amount of years before you would need to withdraw the entire balance. My clients have cash flow cushions so they don't need to withdraw from stocks for several years if in retirement. You have time to ride this out, and historically, downturns don't last more than a couple of years." 

And for younger investors, the news is even more warming. Said Euretig, "If you're far from retirement age, you have plenty of time for markets to recover. Stay the course."

8. Remind yourself why you work with a financial planner in the first place

Finally, Euretig hopes that you remind yourself that you aren't in this alone - that situations like this one are exactly why you hire someone like her. "This is what makes investment professionals professionals. There's a phone call between you and any financial mistake you might regret down the line. We have the training, education, and experience to have perspective when things get emotional. It's hard to go in and buy when everyone's selling out of markets, but that's what we're trained to continue to do!"Advertisement

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