By Morey Stettner
When the stock market hits a speed bump, financial advisers regularly calm jittery clients and urge them to stay the course. But clients aren’t the only ones watching their portfolio sink. Advisers lose money too. They follow the same investment principles that they preach to clients — and share their plight in turbulent times (like now).
How do investment professionals cope with severe downturns? “Advisers have to lead by example,” said Daniel Yerger, a certified financial planner at MY Wealth Planners in Longmont, Colo. “Part of that is putting on the brave face clients and the public need when applying a disciplined investment process.”
Yerger doesn’t just commiserate with clients as their losses mount. He lets them see his pain. About four years ago, he had an idea: He bought a glass display case, placed it in his office and filled it with his financial statements for all to see.
He regularly replaces his old statements with new ones. Examples include his brokerage accounts, 401(k) statements and cash-value life insurance policy. Yerger’s commitment to what he calls “aggressive transparency” strengthens his bond with clients. They see that he’s suffering with them.
Advisers who disclose their dwindling assets signal to clients that everyone’s in the same leaky boat. But it still stings. “We’re not immune to the same emotions that affect our clients,” said Michael Reynolds, an adviser at Elevation Financial in Westfield, Ind. “We look at our plunging account balances and get those same sinking feelings.”
Advisers often adopt the coping mechanisms they suggest to clients, such as seeing their portfolio over a longer time frame. For example, the S&P 500 (S&P:SPX) has produced average annualized returns of about10.5% over many decades — despite wars, a pandemic and other calamities that trigger short-term collapses.
They also urge clients to avoid tracking daily market swings. Leland Gross, a certified financial planner at PeaceLink Financial Planning in Virginia Beach, Va., avoids checking his account frequently during severe market swoons. He advises clients to do the same.
“I know I’m not touching that money,” he said, so there’s no need to tally how much vanished on a given day. “With goals-based planning, I know the purpose of this money and when I’ll need it and what it’s for.”
Still, Gross acknowledges that there’s no easy way to persevere as your account balance erodes. He cites the first month of the pandemic in 2020 when the market fell about 34%. “March 2020 was uniquely stressful,” Gross said. “The whole world was shutting down. We didn’t know it would be a quick downturn.”
Today, his stick-with-the-plan mentality is helping Gross and his clients weather the storm. “But it still shocks me when I look at my account and see how far down it has gone,” he said.
In addition to taking the long view, advisers respond to heavy losses by refusing to berate themselves for past investment decisions. Jarrod Sandra, a certified financial planner at Chisholm Wealth Management in Crowley, Tex., does not dwell on what he could have — or should have — done to avoid losing money. Instead, he tells himself, “I made my decision. Don’t stress over things I can’t change. Apply what I learned and move on.” For instance, he no longer buys individual stocks for his personal account.
Yet one part of a market downturn still upsets Sandra: He wishes he had even more cash to invest. He said: “I’m actually more flustered that I can’t put more into the market at this point.”