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General Published on: Fri Feb 10 2023

Understanding COVID-19 and Impacts on your Wealth Management Firm

It’s been over ten years since the last market pullback. Now, we’re experiencing a black swan event with the impacts of COVID-19, or the Coronavirus. Lives have been impacted, and business as we know it has been slowed or stopped. With such a hit, global and national markets have been negatively impacted.

The United States stock market is down over 20%, and people are beginning to worry about their investments. Rightly so since the last recession wiped away retirement funds and forced people to continue working or even lose their homes. As a wealth management firm, it’s essential to bring stability and calm in a world full of volatility.

Limiting Financial Fear

Limiting the fear of financial loss during a time such as this is important. The human mind is powerful, and in times of panic, the fight or flight response tends to take over. As a wealth management firm, it’s critical to keep your clients informed and aware of the long-term financial objective.

In a perfect world, portfolios would be constructed so that the investor is making money no matter the market conditions. However, we live in a world where that’s nearly impossible. By calmly presenting that potential losses in portfolio value are only temporary, you can illustrate that the overall market has always recovered over time.

Wealth Building Potential

Depending on your client base and their financial objectives, the downturn in market performance can offer stocks and other investments at a discount. By turning a negative into a positive, you can show your clients the value of market pullbacks and how they are important for healthy markets.

An example will be looking at discounted blue-chip stocks and seeing if there’s a place to put money to work. Certainly, this tactic isn’t going to be applicable for everyone, but you can bring value to your clients even when the market is down.

Reiterate Long-term Goals

Markets go up; markets go down. Unfortunately, COVID-19 is out of our control, and it’s merely a waiting game. Now’s a perfect time to help remind your clients that investing is a long-term game, not short-term. Yes, portfolios were likely negatively impacted, but we will probably see a market above and beyond the levels we saw just a few months ago over the next few years.

Simply being there for your clients during this time may all you need to do. You’ll likely be hit with requests for different reports, information, or just simple questions. This is a great way to build trust and reputation with your current and future clients at the end of the day.

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