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Portfolio > ETFs > Broad Market

3 Clients Wanted to Cash Out. Their Advisor Talked Them Down.

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If there has ever been a time that advisors have had to work extra hard to not only communicate with their clients regularly, but also make sure their clients don’t do anything drastic out of fear, the ongoing pandemic is exactly that time.

Miye Wire, president of Reston, Virginia-based advisory firm MiyeWire, shared the cases of three clients among the 250 or so families she has as clients.

They became so worried about the toll the COVID-19 pandemic had taken on them personally and the overall economy that she had to convince them not to take drastic steps that would hurt them for years to come.

The first two were a husband and wife in their early 30s who became clients late last year, recalled Wire, who has been registered with Woodbury Financial Services (now part of Advisor Group) for 20-plus years.

Profile of the Client Couple

She identified them as high earners — not rich yet but on their way, the wife an executive at a well-known hotel company and the husband working in software sales for a big technology company.

“They just had a really, really big year. The husband had made a lot of money and they were sitting on a bunch of cash, and then they were expecting their first child in February,” Wire recalled.

They started thinking about college and retirement planning in 2019 and a member of the husband’s family was already a client of Wire’s firm for many years.

He referred the couple to the firm, whose clients are mostly 35 to 55 years old living in the D.C. area who are high earners and tax sensitive, she said.

After becoming clients, the couple invested all their cash “right around the beginning of January” in a moderately aggressive portfolio that was based in part on the expectation that the husband would be getting a “big bonus/commission check” in early March, she recalled.

“And then, of course, COVID comes along, the market crashes, their baby is born at the end of February and then the wife of course, working for a hospitality company, gets furloughed,” Wire said.

And then, on top of that, the husband’s company, “which is doing fantastically in this environment, basically says, ‘We’re going to hold or freeze all of your bonus and commission checks,’” she said.

Coronavirus Crunch

The couple didn’t expect to need the money they had invested — it was for retirement and the child’s college education.

However, now, Wire pointed out: “The wife’s basically out of a job. They cut her to 20% of her pay indefinitely,” and the couple realized they were “100% responsible for the life of this other being.”

There were plenty of reasons behind the couple’s sudden fear, she said.

“Between the sleep deprivation of a newborn, the responsibility, the wife getting furloughed, the husband not getting a bonus check, the market tank[ing] and then he was afraid his parents might need some money because of what’s happening in the economy … They sent me an email one Friday and were like, ‘OK. We want to cash out our account by Monday’ or something crazy like that,” the advisor explained

She wound up talking them through the situation in late March, she recalled, adding: “It was their first experience in the market ever really outside of their 401(k)s … I was able to talk them out of selling anything” while the market was down.

“They had a small amount of fixed income in their portfolio, so we just agreed that I would send them that,” Wire said. She sent them some money from their bond fund, which went up when the market went down, and convinced them that would give them “a little bit of security.”

She said she would check back with them in a couple of weeks. “It’s helped that the market has started to recover a little bit [and] they’re kind of feeling more comfortable,” she said, adding the parents also didn’t need the money after all.

At the end of the day, Wire said she “wanted to make sure they didn’t do anything that they would regret later, just out of fear and emotion — and I think we’re, knock on wood, past that point.”

She also wanted them to not regret making the investments they made and “understand there’s not a bad time to be invested…. For them it’s all long-term money.” And she accomplished those goals.

The Panicked Pre-Retiree

One more example was a client in his mid-60s who “completely panicked, right at the very beginning” of the pandemic, “before the shutdown even happened,” Wire remembered.

He had been telling the firm he planned to retire. And then one Monday morning, he told them that he went online and cashed out a 401(k) her firm did not manage over the weekend.

Wire had him come to the office and “I sat with him in the office for like an hour talking him down,” she said, noting he was a federal government retiree but then kept working as a contractor for about the past 10 years.

The “good news” is that the 401(k) he cashed out wasn’t a huge part of his portfolio because he didn’t stay with any one contractor job for more than a year or two after retiring from his longtime, full-time government job with a full pension, she noted.

“We did convince him when he came in on Monday not to touch any of his [investments] with us,” Wire said.

He wanted to pull out everything from his IRA with her firm, but he didn’t move anything after talking with her, and he has been fine since then, the advisor added.

That client is still working even though he doesn’t need the money to stay afloat, she noted, and he is planning to fully retire this summer.

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