My role in the lives of my clients is a diverse one. Of course, my team and I execute advanced financial planning, and help clients set realistic and attainable goals.
But equally important is the guidance I offer my clients to help them through the dramatic emotional shifts that occur during uncertain financial times like these.
As a certified Behavioral Financial Advisor, I ask the probing questions that allow me to better understand each client’s concerns so that I can provide suitable recommendations.
For example, your financial risk tolerance - the max you can suffer financially - may be different than the emotional tolerance you might have in the face of a down market. My goal is to help manage those emotions so that you can make better decisions.
Below I’ve included a few simple tips to help you stay focused and objective as we begin the long process of uncovering our new “normals.”
1. REVIEW YOUR GOALS & STAY THE COURSE.
Contact me so that we can reevaluate your short- and long-term financial game plan. This process can help maintain an overall sense of financial wellness, and prevent hasty decisions that could negatively impact your retirement savings.
Remember that a balanced portfolio is the best defense against downturn, and can help position you for market recoveries.
“Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
-- Journalist Jason Zweig
2. AVOID KNEE-JERK REACTIONS.
Resist the urge to make quick decisions based on emotional biases.
Let’s consider the bias of loss aversion as an example. In some cases, loss aversion can prompt an investor to double down on a flailing investment to avoid losses. In other cases, an investor might stay only with safe investments with low returns, which ultimately will reduce his or her purchasing power.
Those biases can damage the overall health of your portfolio, and result in long-term losses.
“The investor’s chief problem – and even his worst enemy – is likely to be himself.”
-- Economist Benjamin Graham
"the father of value investing"
3. EXPLORE ALL OPTIONS.
Take the time to explore all of your options when facing a financial hardship. Decisions like taking out loans from a 401(k) or stopping contributions to your retirement can have a quantifiable impact on your retirement-readiness.
We can explore other ways to help mitigate the need for tapping assets earmarked for long-term savings.
“It is a painful thing to admit that education, intellect and willpower are inadequate to make you the type of investor you would like to be, but it’s not as painful as losing money.”
-- Daniel Crosby
The Laws of Wealth: Psychology and the Secret to Investing Success
Of course, we know it’s hard to ignore the resulting volatility in the economy and financial markets. Market downturns are painful, but not uncommon. Still, it’s well-documented that that knowledge doesn’t prevent negative investor behavior.
Let us be your guide. Contact us today.
Securities offered through Securities America, Inc., Member FINRA/SIPC Quest Financial Services and Securities America are separate entities. Advisory services offered through Securities America Advisors, Inc.