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March 25, 2020 at 02:37 PM
Sure, in the short term, corporate earnings will be “crushed”; but once the turnaround comes, they’ll “explode,” Harold Evensky tells ThinkAdvisor in an interview.
The coronavirus pandemic and the blow it has inflicted on markets and the economy cause people to take note of the industry’s good financial advisors and generate increased client trust in them, says “The Dean of Financial Planning,” as Evensky is known.
The veteran advisor, 77, chair of Miami-based Evensky & Katz/Foldes Financial Wealth Management, which he co-founded in 1986, no longer manages the firm’s day-to-day business but consults to the practice regularly.
What do clients want most from their advisors at this moment? A proactive phone call to comfort them, says Evensky.
In the interview, he suggests some specific comforting telephone dialogue.
When it comes to investing, clients should be revisiting financial plans and rebalancing their portfolios, according to the certified financial planner, who predicts that the COVID-19 catastrophe will mean that, in the future, advisors will focus more on holistic financial planning.
ThinkAdvisor interviewed Evensky on Tuesday. He was speaking by phone from his home in Lubbock, Texas. As for the future of his own practice, established more than three decades ago, he shared a few long-range plans.
Here are highlights of our conversation:
THINKADVISOR: What are your words of wisdom at this difficult time?
HAROLD EVENSKY: There’s no earthly reason to believe that this is permanent. The world economy will recover. Markets will recover. It’s not like every company in the world has gone bankrupt and will stay that way forever.
Can the crisis boost trust in clients’ financial advisors and strengthen the FA-client relationship?
Absolutely. This is when we earn our money. When the market is going straight up, everyone looks brilliant, though good advisors often look stupid because we’re very diversified. But in times like now, we look a lot smarter because we’re diversified and are very proactive: We talk to our clients, hold their hands and keep them from jumping off bridges.
That demonstrates value-add. Does it not?
It’s a time when people appreciate the value of what we do. When the market is going up, it doesn’t look like we add much value: “What do I need you for when I can get rich all by myself!”
Therefore, advisors should be calling clients proactively?
Yes. If the clients call us first, we’ve made a mistake. We need to call them.
What do clients need most from their advisors right now?
Comfort, assurance, information on how they stand, what, if anything, they should be doing [about their investments] and should they be paying attention to the talking heads on TV and radio. Mostly, clients just want to hear from their advisors [period].
That’s pretty much not the typical case. Right?
In times like this, it’s classic that brokers and bankers hide under their desks and don’t call because they don’t know what to say.
What should they say, then?
Not talk about the market that much but rather: How are you doing? How are you feeling about all this? What are you doing to protect yourself? How’s the family? Then: Let’s talk about your circumstances: We’ve updated your plan, and you’re in fine shape. You have plenty of cash reserve that we set aside for times like this. We’ve got plenty of time, and things are going to get better.
But clearly, this crisis will have severe impact on corporate earnings. Your thoughts?
Short term, they’re going to be crushed. But when the economy turns around, I think they’ll explode. I have no idea when that will be. The world has been through lots of horrible traumatic events and has survived. The best guess is that we’ll survive this one, too.
