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Expert Insights for Smart Financial Planning

Is Your Adviser A Bridge Over Troubled Waters?

Recent market volatility provides a good test of a real pro. What has yours done for you lately?


You know the old saying about how tough situations can be an acid test of character? The same goes for the character and quality of investment advisers. When volatility heightens or the markets experience sharp corrections, some advisers avoid picking up the phone. And often, when anxious clients call in with a desire to sell out of the market, many advisers and brokers have been known to capitulate—against their better judgment.

See Also: How to Pick a Financial Planner

This raises the question: Why are you working with an investment adviser? For many, getting professional guidance in preparing for difficult markets is near the top of their priorities.

Here's what your adviser should be doing in today's skittish investment climate:

  • Reaching out to you proactively to provide emotional support
  • Serving as a filter for information that's useful and relevant to your needs
  • Helping you to maintain your focus as a long-term investor

If your adviser is addressing all three during the market turmoil we've experienced lately, you'll worry less, find it easier to stick to your long-term plan—and be more likely to achieve the financial goals your plan strives for.


Moving Towards the Issues

Let's start with emotional support. At Halbert Hargrove, we try to see things from our clients' perspectives. Every client has different needs, but we don't know what these are unless we ask. That's why we've made it a point to reach out to all of our clients during this first quarter to hear how they're experiencing the daily gyrations and pervasive air of uncertainty. For many clients, making ourselves available to answer questions and talk through any anxieties or fears associated with the markets' behavior can help put their minds at ease.

The operative idea here is proactive communications. Your adviser shouldn't be waiting to hear from you during a prolonged difficult period in the markets. They should be acknowledging what's occurring and checking in with you on a regular basis.

Giving You Context

Here's my second valued adviser attribute: helping clients gain greater insight into what's actually going on.

When markets get as reactive and disorganized as they are currently, the noise from the financial press—and even the local news—gets louder, more worrisome, and more pervasive. Last fall, I talked about what your adviser should do in times of market volatility in a separate article for Kiplinger. As I emphasized there, as fiduciaries, wealth advisers are responsible for educating their clients about what to expect as investors.


Your adviser should be helping to filter the fire hose of noisy market information for you. This might include sharing reprints of articles they believe will be helpful, or providing you with written perspectives of their own. That's part of their job. You're paying them for their perspective.

Revisiting Long-Term Goals

Focused, proactive communications can help ease anxieties; they can also go a long way to helping shore up your commitment to staying the course towards your long-term investment goals. Unless your goals or underlying situation have fundamentally changed, you likely should not be giving in to the impulse to 'lighten up' on your exposure to the markets.

Short-term investment performance shortfalls are frequently inconsequential from a long-term perspective. The same can't be said when investors lose sight of their long-term goals, completely selling out of declining asset classes with the expectation that they will reinvest when the market stabilizes. These kinds of moves could end up capturing most of the market's bad days, while losing the better part of the subsequent good ones. Impulsive selling like this can take a heavy toll on long-term performance, and cripple an investor's ability to reach his or her financial goals over the long run.

In our conversations with our own clients this quarter, we're focusing on revisiting their financial goals and how their investment portfolios are positioned to support these. We're confirming our conviction in the long-term viability of the portfolios we've constructed—and reiterating the importance of maintaining market exposure.


We think it's critical that our clients never lose sight of why they're investing.

Reaffirming Discipline

Disciplined investing is fundamental to an adviser's role. I've included the graphic below to illustrate how staying in the markets has continued to pay off for investors over past three decades. The basic difference between market returns and average investor returns? Staying put with a well thought-out strategy.

Poor market performance tends to be transitory. Your adviser should be helping you build and stick with an investment discipline that you can view with confidence. When volatility becomes especially pronounced and headlines around the world are broadcasting gloom and doom, you should be able to know that you can count on your adviser to reach out to you to help you maintain perspective.

See Also: Knight Kiplinger's 8 Keys to Financial Security

Russ Hill CFP®, AIFA® is CEO and Chairman of Halbert Hargrove, based in Long Beach, CA. Russ specializes in investing, financial planning and longevity-awareness solutions.

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