Sticking with the Financial Plan

Our most critical advice to clients experiencing market downturns is to stick to their personalized financial plan. Our team dives into the importance of creating a plan and long-term strategy at the beginning of the financial journey.

Joshua P. Mersberger, CFP®, CRPC

Jul. 19th, 2022

Sticking with the Financial Plan

When markets endure bouts of volatility, the first question on every investor’s mind is, “Am I going to be okay?”, and “What actions should be taken?” I do not know anyone who enjoys seeing a decline in their hard-earned portfolio. At our firm, we deal with the stress and unknowns of markets daily and do our best to advise clients through periods of volatility and bear markets, which we are currently experiencing. The first thing we do with clients when they are questioning if they will be okay is revisit the personalized financial plan we have created with them.

The financial plan is the cornerstone of almost every client relationship. It shows where clients currently are in relation to their financial goals, where they want to be, and how successful they will be in retirement if they continue their current path. The financial plan considers both good and bad markets, and we can stress test portfolios to show clients what their portfolio and retirement plans look like if we go through a sustained downturn. Looking at these scenarios when we begin to work with a new client, it allows our firm to assess the appropriate level of risk on a client-by-client basis and custom design a portfolio tailored to each client’s unique situation.

The financial planning process allows our Certified Financial PlannersTM to assist directly with client worries and fears during market downturns. We do this by showing how successful the plan looked six months ago at the market peak and how the recent downturn has impacted it. This allows our clients to assess the downturn’s impact, and we can help them evaluate if we should change our current strategy. We often find that downturns have a minimal effect on the financial plan as market downturns happen regularly and typically last around 18-24 months from peak to trough to peak. When looking at a financial plan, we typically plan out at least 30 years. It is helpful for investors to take a step back from the day-to-day changes and look at the big picture.

Our advisors at Mersberger Financial Group feel that it is almost impossible to assess the impact of a market downturn if a client does not have a financial plan as it is difficult to benchmark the market drop. We encourage every client to go through the financial planning process with our firm and believe everyone deserves a financial plan.

Visit the financial planning page on our website to learn more about our financial planning process and get started with one of our advisors!

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