By Morey Stettner
What financial advisers do when markets seem unmanageable
Most people operate better in a predictable, stable environment than a chaotic, uncertain one. When uncertainty reigns, people get anxious. Safe assumptions about where to park your money no longer seem clear. Dislocation on many levels can leave investors frightened and unsure what to do.
Financial advisers can be helpful at these times – but they’re in a tight spot. They’re experts, but they don’t know everything.
“There is no doubt that clients are more anxious than ever,” said Lisa Kirchenbauer, a certified financial planner in Arlington, Va. “This is not an easy time for advisers because many norms of investing [and] economics appear to be blowing up. While we will most likely get through this time of uncertainty, it’s hard not to have the answers. Advisers have to be comfortable not knowing while helping clients navigate uncertainty.”
Before advisers can help clients cope with uncertainty, they need to manage their own angst. Dishing out advice is tough when they’re just as flummoxed as their clients.
For Hazel Secco, battling uncertainty starts with a morning ritual: meditation. A calm mind enables Secco, a certified financial planner in Hoboken, N.J., to help clients stay grounded. She coaches them to overcome cognitive biases and stick to the financial plan she’s customized for them.
“During uncertain times, people want to find answers,” Secco said. “So they pay more attention to outside noise, which can heighten anxiety.”
Secco redirects their focus to their financial plan, urging them to think strategically about the long term rather than react impulsively to the short term.
A loss of control can leave clients adrift. That’s why some advisers help clients regain a sense of command over their life as a way to beat back uncertainty.
JW. Harris, a certified financial planner in Moore, S.C., uses what he calls a “circle of control” exercise. After clients identify their financial concern, he draws three concentric circles on a whiteboard.
The innermost circle represents what the client can control. The next circle is things the client can influence. The outermost ring is everything that’s outside their control.
“The adviser needs to shift the focus to the innermost circle,” Harris said. “The outer circle is not worth your time.”
He also urges clients to replace feelings of uncertainty with gratitude. Recognizing what you’re thankful for leaves less mental energy to worry about an unknowable future. “It’s reframing your thought process,” Harris said. “It’s replacing uncertainty with a measure of control” that comes from feeling grateful for what you have.
Your own self-talk plays a role as well. Faced with uncertainty, you can tell yourself “we’re doomed” and “all signs are flashing red.”
But pessimism is a poor coping mechanism. “Uncertainty doesn’t necessarily mean catastrophe,” said David Shotwell, a certified financial planner in Lansing, Mich. “Our brains lead us to assume the worst possible conclusion, while reality usually steers a middle course.”
Like many advisers, Shotwell grapples with uncertainty as part of his job. He tries to model to clients how to manage the unknown without letting it immobilize you.
Years ago, Shotwell wrote down four principles that govern his investment philosophy. In chaotic times, he grounds himself with these core beliefs:
— In the short-term markets are unpredictable. The market will move based on the day’s headlines and people’s emotions.
— The long-term is positive, based on economic growth, productivity, and technology. And the long-term positives outweigh the short-term volatility.
— No one can accurately time the markets consistently. Build a portfolio for all seasons.
— Risk and return are forever related. You can reduce your risk but you also need to reduce your long-term expectations.
“I share them often in my blog posts and in my conversations with clients,” Shotwell said. In a fast-changing world, these unshakable principles provide ballast.
Shotwell also is careful about the language he uses. It’s easier to stare down uncertainty by speaking – and thinking – in objective, rational terms. “It’s thinking of things as neutrally as you can,” he said. “Use language in your own head, and with others, that ‘decatastrophizes'” so that you don’t leap to a worst-case outcome.
For example, instead of saying “the market’s headed for a horrible crash,” try “it’s a challenging time for the market.” Sober messaging can tamp down the stress that accompanies uncertainty. Better yet, it strengthens your resilience so that you’re ready for whatever comes next.
More: No, printing your Social Security record won’t protect you – but doing this will
Also read: Millennials are getting richer faster than previous generations. Here’s how they’re doing it.
-Morey Stettner
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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03-08-25 1448ET
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