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Portfolio > Economy & Markets > Stocks

Advisors Fight The Mattress

By Barry Higgins

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NU Online News Service, July 31, 1:42 p.m. – Financial advisors are struggling these days to keep retirees’ assets from sliding under the mattress.

The war on terror and corporate scandals have definitely affected retirees’ attitudes, according to Richard English, a financial planner from Arlington, Texas.

“They’re worried that this is going to go on and on and reflect on the financial markets,” English says.

English has watched many of his clients retreat from stocks and put more assets in bonds, cash and other conservative vehicles.

But English and other advisors argue that the flight to safety could do many clients more harm than good. “Unless a person has to sell investments because they actually need the money, I wouldn’t advise it,” he says.

Hartman Axley, a Denver advisor, agrees on the need to stick with stocks.

Liquidating depreciated assets “really locks in a loss,” Axley says. “Our advice is clearly that the market will come back.”

Even before stocks went down, advisors say, retirees with good advisors should have had their money in a mix of asset classes, with the income needed for living expenses coming mainly from fixed-income investments.

Retirees should not have been expecting to draw on the portion of their portfolios invested in stocks for years to come, advisors argue.

For retirees with well-designed portfolios, “just look at where their retirement income is going to come from,” says Cheryl Johnson, an advisor in the Rochester, N.Y., office of American Express Financial Advisors. “Why would you sell at this time if you’ve got that five-, 10-, 15-year time frame?”

Johnson recommends that advisors help retirees remember the reasons they chose certain investments in the first place.

“If those are still good reasons, you should sit tight,” Johnson says.

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