How are financial advisors, those paid to help us laypeople plan for and ride out the ups and downs of economic life to match our goals for comfortable lives, speaking about the roiling stock market, business and personal income challenges of recent weeks?
We decided to look beyond the major companies’ websites, where the likes of Merrill Lynch, Edward Jones and Morgan Stanley aren’t saying much about what’s been happening this month beyond top-of-page links to corporate statements on coronavirus.
One company notes that they’ve suspended all person-to-person meetings. Morgan Stanley’s main page is filled with pieces about ways to gain perspective on short term losses, how to gauge recessions, and ways to weigh risk. “Amid news about the coronavirus (COVID-19), we are committed to doing everything we can to meet your banking and investing needs.,” notes Merrill Lynch’s link to its corporate mother at Bank of America. “We will continue to devote all necessary resources to help ensure your personal safety, while maintaining all of the services you count on. And as new developments emerge, we will share information with you about how we continue to operate safely and effectively.”
It’s only when you get closer to home, to the more independent certified financial planners of the Hudson Valley, that a more nuanced sense of what’s going on, how those with investments in the stock market are reacting, and ways in which the current shifts may end up changing our views of wealth and quality of life issues come into view.
“I just responded to a client by email. This is very crazy…I ask my clients to close their eyes and look for a big picture perspective,” says Irene Berner of New Paltz, fresh back from a walk on the Mohonk Preserve. “I’ve had my own firm since 1996. Let’s first understand this is not a financial crisis. It’s a health crisis. There’s a business crisis. It’s not like 2008/09…We must first assure that everybody’s safe, get this virus under control. Once that happens then we can look at the financial elements involved.”
Berner, who adds that she was in Milan in January for a finance class, keeps being reminded of how the market dropped 22.5 percent in one day in October of 1987, and saw similar investor fears. She recalls the market and business effects of 9/11, but also how long it took to label the downturn of 12 years ago a recession, and then how that turned around.
“This is unprecedented but historically the market has always come back. The markets want to go up,” Berner adds, admitting that her optimism has always served her well in her line of business.
Kingston-based Cliff Faintych, also independent, noted that, “there may still be more decline before things turn around, and the economy is now certainly going into a recession. But it is important to understand that this is not the same as the Great Recession after the market crash of 2008: The Coronavirus pandemic brings fear of new uncertainties, but there is every reason to believe that the resiliency of our American economy will prove out for a robust recovery.”
He went on to stress that all in their working years still search out ways to save for retirement, utilizing current “deep discounts” pushed by the Federal Reserve to fund IRAs and Roth IRAs if not the beneficiary of a 401(k) or similar employer-sponsored retirement savings plan.
“If you are recently retired, then now is the time to re-evaluate your financial goals and control your budget: If you can afford to, delay distributions from your retirement accounts for the next few months,” Faintych added. “Better to spend down non-retirement account savings to prevent selling investments in tax favorable retirement accounts during this down market. If you are retired and in your sixties and you have a significant amount of 401(k) or IRA savings, then now is the time to consider a Roth IRA conversion: If you do not need to withdraw from your retirement accounts right now, then a Roth conversion may be in your best interest because you will be paying income tax on the amount that you convert now when the value of investments in your retirement account is lower. For anyone that is a homeowner with a long-held mortgage, perhaps 15 years into a 30 year mortgage, now is the time to consider refinancing your home: With real estate prices still near all time highs, and mortgage interest rates pushing to all time lows, a refinance of your existing mortgage balance may prove to reduce your monthly payments and provide savings over the long-run.”
Sal Bocchimuzzo, at Mid Hudson Federal Credit Union Investment and Retirement Center (part of CUNA Brokerage Services, Inc., the leading broker dealer exclusively serving the credit union industry), said he’s been fielding “panic calls” from clients concerned about recent market drops, but telling all that “the key to remember is that the market is going to bounce back quicker than the economy.” Although he added that the timing of such movements is still a question given that “it could still take another two to three months before the country starts opening up again.”
Bocchimuzzo, like all the financial planners we spoke with, noted that it’s not the proper time to discuss investment opportunities, only that if we’ve not hit bottom yet, “we’re pretty close.” He stressed that the moment wasn’t right for much action.
“If you didn’t move to cash or bonds two to three weeks ago, it’s too late,” he said. “I’m telling everyone that if your goal is long term, over a year, you’re going to be fine. Take a deep breath. Take it one day at a time. Be diversified.”
Barbara Ginty, who runs her family’s Independent Financial Services under the LPL Financial banner, meanwhile noted that “today was another rough one” as we began speaking.
“I think it’s hard to compare what’s been happening to anything. We’ve never been through a pandemic before,” the 35 year old Wall Street veteran said. “I think it’s a unique situation. And given that the economy was doing pretty well before this hit, I believe that long term things will come back. In the short term we’ll see a recession, but since all of our clients are long term investors they should be fine…I’ve always told my clients to stay away from the TV in these scenarios.”
On a personal protocol level, Ginty pointed out how she’s been working remote while her assistant, who has a “full home” has been staffing the office voluntarily “one person at a time.” All meetings have been virtual and, she adds, she’s been reconnecting with old friends by phone and online, and considering the unexpected benefits of “slowing things down.”
Bocchimuzzo said he’s been going into his office, keeping meetings to a minimum, since his home with kids and a dog “isn’t conducive to work.”
Berner, who describes herself as “an old hippie who attended the Woodstock Festival in 1969,” noted her belief that most of her clientele, largely women, will likely come through the current shifts re-thinking their ideas about wealth and quality of life. She talked about the general belief that people’s greatest fears tend to focus on death, and dying penniless. But then she asks deeper questions…
“What level of wealth do you need? Do you really want to sit on a pile of money to the end,” she asked, rhetorically. “If you’re not using your money to help promote peace of mind, what’s it for?”
Berner talked about one client with two million in her portfolio “who was never comfortable about what she had.” She spoke about telling all her clients to keep an emergency fund, and not to worry if they don’t need their investment funds for the next year or so. If one needs to “tap in,” do so on a month-to-month basis until things start to recover…which would need for a recession to be acknowledged first (six months, at least) and then end (12 to 18 months).
She added that the subject she’s been coming back to of late is simple: What’s enough?
“I think there will eventually be a pent-up demand for the services our businesses supply, and an appreciation of them,” Berner said. “And as I said earlier, I think there will be questions about what we appreciate our wealth for. It will be more important to look at what you need for the quality of life you want.”
Which Faintych, too, reiterated in his own way…
“Remember that retirement is a long journey hopefully lasting thirty plus years, and like all financial shocks, we will get through this one too,” he said.
Optimism, everywhere. With caveats, and a shifting thoughtfulness.++