Retirement Account Swings Keeping Advisors Busy Soothing Client Nerves

So much for set it and forget it.

The recent volatility in the stock market has retirement savers doing exactly what they shouldn’t be doing, according to financial professionals. And that’s constantly checking their account balances.

Or even worse, making rash portfolio decisions instead of sticking with the long-term plan they painstakingly created years ago with their advisor.

To Michael Conrath, chief retirement strategist at JP Morgan Asset Management, all that looking is part of the problem.

“It certainly feels daunting, but successful investing is not about trying to time market. It's about time in the markets. And if you would miss just the 10 best days in the market for the past 20 years, your account value would have been cut in half,” Conrath said.

Conrath’s advice to those folks who can’t help but check their 401ks when the going gets tough is to “zoom out” and make sure their investments are aligned with their life stage. Those closer to, or in, retirement, for example, should focus more on safety and diversification. Those with more time before retiring, on the other hand, should consider riding out the turbulence by sticking with the investment strategies they already set out.

Conrath suggests one area that is often overlooked by retirees during uncertain times like these is spending.

“Spending is typically highest those early years of retirement because you're on the go, you're traveling, you're crossing off everything on your bucket list. But it's also important to make sure you have enough guaranteed income to meet your stable or ongoing monthly spending needs or for anything else that's a ‘nice to have,’” Conrath said.

Along similar lines, Ashley Weeks, wealth strategist at TD Bank, cautions that investors suffering major portfolio losses five years before or after retirement are subject to sequence of returns risk that can permanently damage one’s long-term retirement solvency. That’s because it forces a saver to liquidate funds in a bear market simply to live on.

“I would probably suggest maybe not watching cable news quite as much as some people like to,” Weeks said.

From a financial advisor’s perspective, Matt Liebman, CEO of Amplius Wealth Advisors, is encouraging clients to lean on the financial, risk, and asset allocation plans that they have worked on together over time.

“There is an instinct for people to be more concerned about volatility if you are in retirement or closer to retirement. Our view, however, is that if our client’s portfolios are aligned with their retirement cash flow plan then they too can ride this current storm out calmly,” Liebman said.

Elsewhere, Josh Hawkins, VP of financial planning at Leverty Financial Group, admits he’s had a few clients express concern with all the recent market swings. Overall, however, he said most are staying focused on the long-term plan they built together.

“For retirees, a majority of our clients have many years of fixed income in their portfolios that we can draw on while the equity markets recover. While those still working are using this as a chance to invest strategically. It’s less about reacting and more about staying grounded in the bigger picture and the financial planning,” Hawkins said.

Finally, Patrick Nerney, investments SVP at Dynasty Financial Partners, said his clients are indeed anxious over the current market gyrations – “and rightfully so.” He adds it's the responsibility of a financial advisor to support clients not only during the prosperous, calm periods but also during times of uncertainty and market turbulence. Being present and proactive in moments like these is at the “core of our value as advisors,” according to Nerney.

For his accumulator clients, Nerney said many are viewing this environment as a compelling opportunity to invest. On the other hand, his retiree clients are taking a more cautious approach, a mindset that naturally aligns with their stage in life and financial priorities.

“As with all market cycles, this too shall pass,” Nerney said.