How your financial advisor can help during turbulent markets
By ATB Wealth 30 March 2023 4 min read
Humans are hard-wired to avoid pain and seek pleasure; it’s how we survive as a species, and in times of crisis, this couldn’t be more true. However, in the world of investing, survival may require us to do the exact opposite of our primal instinct. Sometimes we have to weather short-term discomfort in order to succeed in the long term.
It’s not easy watching your investments or savings go down at the best of times and adding in the uncertainty that comes with major geopolitical events and negative headlines creates another layer in our desire to avoid loss. Having support and guidance can go a long way in keeping us healthy in both our personal and financial lives.
How an advisor helps at every stage
Picture this: you and perhaps a loved one decide to embark on a long sailing adventure to a far-off destination. After some research and preparation, you are ready to put your sailing skills into practice. You enjoy many days on calm waters soaking up the sun while managing the helm of a serene voyage.
Soon the winds pick up, clouds roll in and waves slam into the hull of the ship. You remember lessons on how to navigate through rough weather, but right now your sense of unease quickly turns into panic as conditions worsen. It quickly becomes apparent that you and your partner, amateur captains, are not as well-equipped as you thought to navigate the storm.
Investing in volatile markets can feel just as frightening, especially if you’re navigating them alone. It’s in stormy weather that an experienced co-captain can help take the helm and guide you to make the best decisions. Here are a few ways a financial advisor will help you navigate a down market.
1. Preparation and planning
Not only are co-captains valuable during storms, they’re also great sources of expertise leading up to the voyage and during periods of fair weather. Before you even step off the dock and set sail, you need to spend time planning and determining several key aspects for a successful trip.
Your journey to financial success is no different; it requires establishing and clearly understanding your personal goals and diligent planning and preparation in order to reach them. An advisor can act as this co-captain in both the planning stages and during the long trip itself, guiding you through the vast ocean of uncertainty and complexity towards reaching your financial goals. Crafting a well-thought-out plan will go a long way in providing the best chance for a successful trip—regardless of the weather.
2. Maneuvering bumps along the way
Life doesn't always go according to plan, and in those moments, having an advisor you trust is critical. Stormy seas, turbulent financial markets, and global conflict can appear without warning, and even the best-laid plans might not calm your emotions. Remember, we are hardwired to avoid pain so you may suddenly begin to doubt your skills, forget your knowledge, and look to abandon your plan.
Simply telling you to ‘remain calm’ and ‘stay the course’ is not enough. An advisor should listen to your concerns and work with you to understand the root of your fears. They will also remind you of the preparations you took and help determine if this storm really poses the risks of capsizing your boat, or if it is an uncomfortable part of the journey already considered in your plan.
Revisiting your plan is particularly important if your personal circumstances have changed to determine if some small adjustments need to be made. For example, this could take the form of increasing short-term cash savings if you or a partner have employment uncertainty. Your advisor will guide you through your options so that you’ll be able to understand how they affect your financial goals in order to arrive at the best decision for you.
3. Helping to avoid emotional decision-making
If you're feeling uneasy about your investments, your financial situation, or about anything else, reach out to your advisor. They will welcome the opportunity to have a meaningful conversation with you about how you’re feeling.
By listening to and understanding your concerns, and assisting in pointing out any emotional and behavioral blindspots or biases, your advisor can help you avoid making emotionally-driven decisions at inopportune times. They will draw on the knowledge, sound judgement, and goals that built your financial plan to recommend either “full-steam ahead” with no change of direction or a slight “course correction,” if needed. Regardless of the recommendation, you should feel heard and supported to give you confidence in your decision.
4. Cutting through the noise
There is never a shortage of conflicting information and opinions bombarding us during periods of choppy oceans or turbulent financial markets, and it can quickly become overwhelming noise.
Adding to this confusion, we also have a tendency to look around to see how others are acting as a basis for our decision making. In a storm, we may see others jumping overboard and abandoning their investment ship. Your goals and financial circumstances are unique to you, so it's best not to worry about what your neighbours or co-workers are doing.
During these moments, an advisor can help cut through the noise and be a source of truth. They will be there to help educate, support and challenge you to increase the likelihood that you’ll keep practicing good financial behaviors while remaining focused on what’s important for your success.
If you feel that you are lacking a plan, having a hard time with market turbulence, making emotional decisions about your investments, or struggling with the noise and headlines, we’re here to listen and help you get back on course.
ATB Wealth® (a registered trade name) consists of a range of financial services provided by ATB Financial and certain of its subsidiaries. ATB Investment Management Inc. and ATB Securities Inc. are individually licensed users of ATB Wealth. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
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