Advisor says many are using this time of uncertainty to examine their existing financial plans
Advisors must be proactive during these challenging times as investors seek information on how COVID-19 has impacted their portfolio.
Sandra Henderson, regional president, Greater Toronto Area, BMO Private Wealth, told WP that while many of her clients are at different life stages, one thing that unites them all is a desire for conversations around re-examining their financial plans. Now is the time for advisors to ask the question: what’s changed? Risk tolerance? Time horizon?
She said: “In most cases, it’s about being reassuring. We build the plan based on volatility, although obviously not to this extent. [We tell them] that their plan is still intact and nothing has really changed in terms of the overall financial plan.”
She added: “In an ideal circumstance, people would have had a plan that predicted some sense of volatility because we always know that the economic situation is sometimes predictable, sometimes not, whether that's because of a natural disaster or anything that impacts the overall economy.”
Heading into this crisis, Henderson said investors should have had two fundamental things in place: a long-term plan and a diversified portfolio. The latter should have a mix of longer-term equity type balancing as well as shorter-term bonds, and cash strategies inside of that. “It’s not going to completely relieve all volatile activity,” she said. “But it should take some of that severe impact away.”
Henderson’s main advice to investors is to stay the course. Take a look at your original plan and, if there are no changes to risk and time horizon, stay on track. Many of her clients were savvy enough – once the initial shock had eased – to view this as a buying opportunity.
“The first week was a bit of shock and awe,” he said. “Then everybody started to take a look at it, but by the second week it was actually quite fascinating; the first things clients were saying was ‘what’s on sale?’ She added this an opportunity for those who have a good sense of risk appetite, especially now people have started talking about what a potential economic recovery would look like.
Giving prudent advice, however, also requires an advisor to look after themselves first and foremost. Henderson said finance professionals must take of themselves in order to be the best they can for their clients.
“Don’t assume anybody's okay in the sense of understanding their financial well being,” she said. “Be frequent with communication. We’ve been trying to do a bunch of things around publications, email, phone and video.
“What we're hearing most times is that clients are just happy to hear someone's voice to give them the confidence and peace of mind that there is a plan and we're sticking to it, or in other instances, that someone is there and willing to re-examine it.”
