The stock market soared on the Food and Drug Administration’s emergency-use authorization for Pfizer’s COVID-19 vaccine, the first of many coming from big pharma companies. But maybe investors are just a little too jolly. Maybe even giddy. Could it be that what’s called for right now is some cautious optimism?
That’s what financial advisor Christopher Manske, founder of Manske Wealth Management, argues in an interview with ThinkAdvisor.
It’s more complex than just “There’s a vaccine! Everything’s great!” stresses the advisor, a 20-year Merrill Lynch FA before launching his own Houston-based RIA in 2012.
A former U.S. Army captain who served for six years in Germany and Bosnia, among other locations, Manske manages about $350 million in client assets.
In the military and as a financial advisor, Manske is all about preparing for the next crisis. “An uncertain future is what we can be sure of,” he contends.
In the interview, he recommends proactive steps to take for better insulation when the next crisis strikes. He focuses on 20 of these in his book, “The Prepared Investor: How to Prevent the Next Crisis from Affecting Your Financial Independence” (Changing Lives Press-Oct. 2020).
ThinkAdvisor interviewed Manske on Dec. 14, three days after the FDA announced its authorization for the Pfizer vaccine. Speaking by phone from his office in downtown Houston, the advisor argued that investors should anticipate potential distribution glitches and behavioral pushback on the part of Americans amid this and other vaccines’ rollout.
So bear in mind one of Manske’s proactive steps: “Don’t let good times affect your vigilance.”
Here are highlights of our interview:
THINKADVISOR: Do you discern a certain investor giddiness accompanying the Pfizer COVID-19 vaccine rollout? How should advisors be thinking about these vaccines when it comes to investment decisions?
CHRISTOPHER MANSKE: The market has viewed the [Pfizer authorization] as wonderful and reacted really positively. But the word “giddiness” strikes a chord with me because maybe they’re a little overly happy. Maybe there’s something that people are missing, and we’re a little bit too jolly about it.
What could be a stumbling block?
There’s still the rollout — the execution of getting the vaccine to everybody and what that really means. Are we going to need to travel with proof and show a card that we’ve been vaccinated? How would the public react to that?
What was your own reaction, then, to the vaccine announcement?
Cautious optimistic. People are like, “Oh, there’s a vaccine! Everything is great!” But it’s more complex than that.
Is this a time for FAs’ clients to change their investments?
No. And I don’t think we’ll see cautious optimism until after a full quarter of vaccination rollout nationally and internationally. Also, there’s a certain population that doesn’t trust that vaccination is the right thing to do.
Investors don’t have to be scared of the next unknown, terrible calamity — they can “just ride the wave with it.” You cite that, in your book, as the prevailing wisdom concerning financial crises. But you disagree. Why?
I disagree so strongly. Typically, Wall Street advice about crises is to stay the course, don’t make any changes, keep your head down and try to ignore what’s going on around you. All that is a passive wait-and-see approach.
How can preparing for a crisis help investors?
When you’re prepared, the crisis affects you differently. It’s like, if you carry a tire iron, a jack and a spare in your car, when you get a flat, you’re affected differently from someone who doesn’t know how to change a flat and doesn’t have the right tools on hand.
This year we’ve had simultaneous thunderbolts: the coronavirus pandemic and with it, a declining economy, including ongoing second and third economic effects. What can you say to clients who worry about what will happen to them now?
It makes sense to be prepared for difficulties because we can’t be sure of good times ahead. In fact, it’s just the opposite: An uncertain future is what we can be sure of. Right now, people are too often dwelling on the pain of quarantining and businesses that are hurting. But also, there’ll be something in the future that we can’t define at this moment. We can’t be 100% sure of what it will be. But preparing for it makes sense.
Terrible things did in fact happen this year; so should investors rejigger their finances accordingly?
Somebody could have been saving money for a rainy day in an emergency savings account, and now that that rainy day has come, they’re using some or all of the money. Now, of course, they have to take steps to start putting money back into that account. The time has come to try to replenish it as soon as they can. Maybe they can’t start right now, but they should have their eye on the horizon because they absolutely need to get back to a state of preparedness.
Do people typically react to a crisis in the same manner every time?
The way they react will repeat itself, but the crisis itself is going to be new, scary and a different one. We don’t know exactly what the situation will be. But there are 20 proactive steps that investors, or individuals in general, can take to be better insulated and ready for difficult times. Right at the top is saving — you should have extra money.
What are other steps?
Remain calm and thoughtful to avoid emotional mistakes. Be ready for illiquidity. Don’t let good times affect your vigilance. Make your reaction plan right now.
What about retirement planning amid the pandemic? Should people change their portfolio or mindset about this important aspect of their lives?
Before the pandemic, if someone had a plan to retire in 2025 or beyond, they probably shouldn’t change anything in their portfolio. But if they didn’t have a plan and are really worried, putting a plan in place is part of being prepared. For other folks who had a plan and were going to pull the trigger pretty soon, like retiring next year or the year after, I don’t think they’ll need to change their portfolio as much as they need to reevaluate: Is that the right date to retire? Or is it better if I stay in the workforce to get through hard times and come out the other side?
Many people have lost their jobs. Some are living on liquidated investments. How can they prepare for the next crisis? Where’s the money to start saving again coming from?
There are two ways to think about this. One is mentally and the other is actual execution. We want to deny and pretend that it’s going to get back to normal tomorrow. Well, it’s not. So it starts with a mental shift to accept this difficult time. Once you’ve done that, execution is a lot easier.
Please discuss execution.
If you’ve been laid off, just hoping your company will call you back or that you’ll do the same kind of work is being passive. You need to get out there and offer your skills in the workplace. Being proactive is important, even taking the more dramatic step of changing to some other kind of work for a while. The question is: How do you make a buck? The answer: Go where the work is.
But companies continue to have layoffs or even close permanently. What should FAs suggest to clients who are directly affected by that?
If extra money coming is the required ingredient for preparedness, make that happen. There really is a lot of opportunity when you expand your mindset beyond what you normally do. Some employers are wondering how they’re going to get customers, but others are saying, “I just can’t get enough people to take care of this surge [in demand].” That’s what we’re seeing in the pandemic: It’s not that there’s no commerce; it’s just a change.
If your job was in hospitality on a cruise ship, you’re probably not going to have work for a while. But there’s a need in a lot of places for the same skills — being able to work with people as a customer-facing employee. Because of the pandemic, there’s actually more need in certain areas of commerce.
Do you have any idea what the next crisis could be?
The national debt. It’s not the immediate next one, but I don’t believe the nation has the willpower or our leaders have the political capital to make the austere moves necessary to roll back the national debt. That means, at some point, we won’t be able to handle the debt we have; and in order to pay it off, we’ll undergo a pretty serious inflationary situation. It could be that [we’ll need to] print extra money to pay it off. The world will question the value of the American dollar and the dollar as the world currency reserve.
Is it too early for people to prepare for that looming crisis?
All the steps [such as those I noted earlier] that can be taken to be prepared for a crisis in general apply to the specific concern about the national debt. We don’t know when [this crisis] is going to happen, but the time to prepare for it is right now.
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