1. Jane Newton, CFP, MBA, RegentAtlantic

“Sometimes the best thing to do is to do nothing,” Newton says. She believes the best trade right now is “the trade you don’t do.” Newton says she asks clients how many years of living expenses are covered by the income they receive from the bonds in their portfolios. “When you put it in dollar terms that helps them stay invested.” Newton is reminding clients why they have the allocations they do and why it's important to stay the course and not panic. She’s not rebalancing portfolios now but is on the lookout for opportunities for later on.

2. Ed Snyder, CFP, ChFC, president, Oaktree Financial Advisors

”I’m not making any adjustments in portfolios right now other than what I would normally be doing to refill cash reserves.” Snyder’s clients who are taking income from their portfolios have two years of income needs in cash and bond holdings as part of their financial plans. If they need more cash now, he will sell some bond holdings.

3. Jay Spector, CFP, Barton Spector Wealth Strategies

“For clients who have income plans and are actively using their investment portfolio for income, this is a good time to confirm retirement income needs and budgets. We have been reconfirming clients’ cash needs and working with them to ensure they have their monthly budgets in place.” Spector is also taking a renewed look at clients' insurance — life, long-term care, disability and health — and any business-related insurance they may have. For clients who need cash within a year, Spector is working “to ensure that they have the needed liquidity” within their financial plan and portfolio.

4. Kevin O’Brien, CFP, Peak Financial Services

“We had our pre-retiree and retirees pretty well allocated for this one” and “the prudent use of various types of annuities has also mitigated clients’ fears. These include immediate annuities that pay a guaranteed income for over a certain period, in combination with either fixed annuities or variable annuities with guaranteed income benefits.” All “serve to help our clients stay calm, knowing that they have plenty of time to allow their stock positions to recover.” O’Brien expects to rebalance portfolios by selling some bonds and buying more stocks “very soon but not right away.”

5. Scott Colangelo, Chairman, Prime Capital Investment Advisors

As the chairman of a firm that serves as a fiduciary for retirement plans, Colangelo says it’s important that retirement plan participants understand the risks of target date funds because most base asset allocations solely on a age and exclude consideration of participants’ risk tolerance levels. While that may be less of a problem for retirees and pre-retirees, it does mean less equities for older investors who want to be more aggressive in their portfolios and more stocks for younger investors who want to be more conservative in terms of market risk. His firm includes risk-based buckets as well as age-based ones for portfolios.


6. Mike Caligiuri, CFP, enrolled agent, Caligiuri Financial

Caligiuri has been using a target date fund approach for clients approaching retirement, using TDFs or mimicking them in a separate investment strategy with ETFs. In late August, he began recommending that clients add a small allocation to gold ETFs, which are not correlated to bonds or stocks. He’s concerned about rising inflation and a devalued dollar due to excessive debt in the U.S. economy.

The stock market may have partially recovered from its drop of more than 30% in recent days, but the problem of big losses in equities and uncertainty in the bond market, especially among corporates and munis, remains as the global economy suffers from a worsening pandemic.

To say that financial advisors are being challenged like never before is an understatement. Clients are nervous about the losses in their portfolios and about what’s to come, and portfolios are out of balance, primarily because of big declines in stock prices. Keeping clients invested and calm is key. “No financial planning software accounts for black swan events,” says Jane Newton, a financial advisor at RegentAtlantic. 

Unless their clients were invested solely in Treasuries or money market market funds or were heavily short the stock market — which would be very unusual for advisor clients — their portfolios have suffered big declines of late. That’s a big concern for advisor clients nearing retirement or already retired.

With that in mind, ThinkAdvisor wanted to hear from advisors about how such clients are holding up based on how prepared they were for this blackest of black swans and what, if any, adjustments they’re making to those portfolios now. 

Several key comments emerged from the handful of advisors we heard from:

  • Cash on hand is a key factor now
  • Rebalancing can wait
  • Staying in touch with clients is key

Visit the slideshow gallery above to see what six financial professionals are saying now about how they’re handling the needs of pre-retirees and retirees.

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