The memory is indelible: in the last two quarters of 2008, investors with short- to mid-range time horizons cringed as their portfolios lost 20%, 30%, even 40% of value. This bear market was not only a test of investors … it was also a test of financial advisors.
Did your advisor respond to the changing environment? When the market corrects, a good financial advisor stays on top of things. As things turned bearish in fall 2008, many portfolios went the way of the market, with numerous investors moving to the money market for cover. Yet other investors found themselves making money during the downturn. Was it luck? Or simply the right strategy?
Some market conditions demand a change. In late 2008, was your advisor sharp enough to meet with you and alter your financial strategy to one appropriate to the bear market? Did he or she offer you an approach that could exploit opportunities in that market with your goals in mind? An astute advisor recognizes that being proactive in a changing market can potentially change the client outcome – for the better.
The market is dynamic. More bull and bear markets will follow. What do you think your current financial advisor will do next time? Sit back and relax when conditions improve? Mysteriously ignore you when the markets slump?
The nonprofit National Bureau of Economic Research (NBER) has recorded five recessions since 1980 and three since 1990. If you are investing by a 20-year or 30-year financial plan, you may ride through a handful of recessions over the next two or three decades if history is any guide. If recessions and bear markets rear their heads, will your investment strategy be updated? What is the risk of having it set in stone?
Today, anyone frustrated with current portfolio values has reason to consider a new financial advisor. If you feel that inattention and misdirection characterize your relationship with your current advisor, perhaps it is time for a change. You are not forbidden from changing advisors. You may look back one day and realize that the change helped your portfolio.
Stephanie Shinn is a Representative with KMS Financial Services, LLC and may be reached at 253.627.8101 or sjs@purcellas.com.
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
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