One of our financial consultants explores how to maintain a long-term view during difficult times.

When I advise my clients, I try and account for a number of variables that can impact a financial plan, a global epidemic was never one of ‘those variables’. There is no doubt that these are completely unique and unprecedented times and pose the biggest challenges to advisers since the global financial crisis of 07-08. However, this is when clients need us the most and the actions we take now could radically impact that client’s future.

Over the past month, I’ve tried to reach out to as many of my clients as possible. The majority remain relatively relaxed and trust things will pick up in time; others tend to be slightly less optimistic and feel tempted to cut their losses and preserve what’s left. I understand and fully empathise with the latter, but in my view, this is not the correct way to go. Selling funds now or de-risking not only means you’re selling at a low value and sacrificing the chance of recouping your losses; but from my perspective, it also completely derails the financial plan that’s been put in place for your long-term future. 

My approach I’m taking with my clients is to set realistic expectations and giving them reassurance where I can. In my view, it would be remiss of anyone to say when markets will pick up in the current climate until we know the full scale of this outbreak. What we can do, however, is look back at recent history (Dot-Com Bubble, Financial crisis, Chinese stockmarket crash) which suggests that in time, markets will rally again.  

Ultimately, I try to strip things right back to client objectives. How has this affected long-term planning and are amendments needed? This will very much depend on circumstances and timescales for needing to withdraw the money after all a loss is only a loss on paper unless it’s crystallised. With some clients, the timing may be most unfortunate and withdrawing may be unpreventable. This is where I can make suggestions in regards to drawing down on funds to mitigate losses.    

I just want to really ensure that investment decisions at this time are rational ones and not driven by human emotion, where it’s in our nature to overreact to things that go badly and underreact to things that go well.

I feel in the current climate and with the restrictions imposed, we are very much in survival mode and not thinking any further than the day ahead. I just want to challenge that thought process and encourage clients to remain bullish in what are very challenging times. For the majority, the end goal/destination remains the same. After all, when you put a destination into Google Maps and there’s a road closure on route, does it cancel your journey? No, it suggests an alternative route to your destination, albeit in some cases a longer one.

I encourage anyone seeking reassurance to speak to their adviser and more importantly to stay safe during this difficult time. For a free consultation, with no obligation, please click here.