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Long-term financial strategies in uncertain times
How financial advisors can help set nervous clients on a path toward reaching their retirement goals.
Since Edward Jones financial advisors get to know their clients' goals, it’s common for discussions with clients to go beyond money, into discussions about hopes, dreams, and ideas.
“What we’ve learned as financial advisors during this time of having these deep conversations with clients is that it’s not only important to ask what’s important to the families we serve but [also to] really understand the why,” says Edward Jones financial advisor Julie Kelly, who is based in Durham, N.C. “Why is that important to them? If we understand that, we can really empathetically continue to listen and understand the clients that we serve and help them achieve their long-term goals.”
Have deep conversations
In times of market uncertainty, financial resilience is even more important. To find out how Americans are coping with today’s financial challenges, and more importantly what financial advisors need to do to help them, Edward Jones—the St. Louis–based financial services firm that employs 19,000 financial advisors responsible for $1.3 trillion in client assets—partnered with Morning Consult to poll 2,000 Americans in September.
The survey found that nearly half of investors feel confident about near-term goals, compared to just over a third who feel the same way about their long-term goals. That puts them in an ideal position to get help from a professional financial advisor—especially one who’s backed by a national firm with a track record of success, like Edward Jones.
“The pandemic has certainly had an impact on retirement, and retirement planning,” says Ken Cella, principal at Edward Jones and leader of the Client Strategies Group. “We’ve discovered that nearly 68 million Americans have altered their retirement timing during COVID-19 and 20 million stopped making retirement contributions all together. With continued uncertainty and market volatility, investors want a guide, someone who can help them navigate challenges and help them get back and stay on track.”
For Cella and Edward Jones, that means partnering with younger clients to help them build financial knowledge as well as helping retirees navigate complexities, with both the knowledge and empathy required to help everyone navigate these unexpected changes.
Keep their money in the market
Making financial decisions based on short-term news can have a negative impact on long-term financial performance, especially when the temptation to sell comes during a down market. Another recent Edward Jones survey, conducted with Age Wave, uncovered some striking facts about retirement investing. Twenty-four million Americans have provided financial support to their adult children due to COVID-19, and seven in 10 would continue doing so even if it impacted their retirement future. In addition, market gyrations over the past several months have many clients ready to pull some or all of their money out of the market entirely. Financial advisors need to explain to clients why they may regret such moves later.
Talking with clients about preserving their personal wealth is imperative for successful financial advisors (whether on the phone or via video calls). Edward Jones financial advisor Jesse Abercrombie, who is based in Plano, Texas, says that he focuses on three tried-and-true topics in these conversations: keeping an eye on expenses, being realistic about future plans, and taking inflation into account when thinking about retirement.
One way to help your clients understand the importance of remaining invested is by using digital tools to simulate performance. The Financial Resilience survey found that nearly 50% of investors said that they’d feel confident working with a financial advisor who could provide digital technologies and tools to help them understand portfolio performance or the value of the financial advisor’s advice, and 41% said the same about financial advisors who utilized simulators and planning for different scenarios.
Abercrombie says that he has always used Edward Jones digital retirement analysis tools in meetings with clients to show them the impact of various financial decisions. Since going virtual, he’s integrated the tools into video calls and gotten a great response from clients.
“When I share the screen, that information is right in front of them and they’re even more engaged with it than they are when we do it in the office,” he says. “Then we can look at their other goals, whether it’s retirement or saving for a home, and they can see what percentage of their goals they’ve met.”
Focus on diversification
While a diversified portfolio is a key component of investing success, the importance of diversification becomes even more apparent when markets are in flux. Take this opportunity to explain to clients why it’s important to make sure that their portfolio includes diversification—both across asset classes and within them.
“As much as we talk about goals and what’s important, the technical aspect of diversification is [also] important,” Abercrombie says. “We want to make sure that our clients are aware of the levels of risk they’re taking in their portfolios, and that they are diversified from an asset allocation standpoint.”
While asset allocation will vary for each investor, depending on their risk tolerance, financial profile, and money goals, having a properly diversified portfolio—and a plan to maintain it—can give them confidence (though does not ensure a profit or protect against loss in a declining market). Reducing concern or anxiety around short-term investment performance can help quell the impulse to panic—and make poor decisions—when markets become unusually volatile.
For clients who remain concerned about having liquidity in the short-term, Abercrombie may recommend setting aside 12 to 24 months’ worth of cash in an account that they can dip into without worrying about current market performance.
“If they’ve exhausted those funds, there’s a good chance their portfolio is back and they’re in good shape,” Abercrombie says. “That’s when we go back and rebalance their portfolio and find their next 12 or 24 months’ of cash.”
Investors are craving guidance right now and looking for a financial professional who can provide it. While conversations about retirement may be different now than they’ve been in the past, the opportunity remains for financial advisors to prove their value to clients and help them build a resilient portfolio that can help them reach their long-term goals.
contributions all together.
Nearly 68 million Americans have altered
their retirement timing during COVID-19
and 20 million stopped making retirement
—Julie Kelly Financial Advisor, Edward Jones
[also to] really understand the why”
important to the families we serve but
“It’s not only important to ask what’s
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Why financial advisors need resilience more than ever
Financial advisor Julie Kelly on empathic advising
How financial advisors can adapt and thrive in every climate
Edward Jones’s Ken Cella on embracing technology
Helping Clients Find the Best Retirement Strategies for Uncertain Times
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stopped making retirement contributions all together.
we serve but [also to] really understand the why”
©2020 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy (Your California Privacy Rights) | CCPA Do Not Sell My Information Fortune may receive compensation for some links to products and services on this website. Offers may be subject to change without notice. Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions. | EU Data Subject Requests
BACK TO HOME
Long-term financial strategies in uncertain times
Edward Jones’s Ken Cella on embracing technology
How financial advisors can adapt and thrive in every climate
Financial advisor Julie Kelly on empathic advising
Why financial advisors need resilience more than ever
EXPLORE MORE