Financial advisers expect to get panicky calls from clients during a market downturn, they say. - Getty Images
You likely saw your portfolio take a sizable hit in March. In fact, the 5.8% monthly decline in the S&P 500 SPX was the largest such drop since December 2022.
And concerns may only grow as the market sorts out what to make of President Donald Trump’s newly announced tariff policy, which will impose tariffs ranging from 10% to 49% on goods coming from several countries. Stock futures turned sharply lower in an immediate response to the news.
All of which means you’re probably tempted to call your financial adviser, if you have one, to sort out what to do next. That is, if you haven’t already made repeated calls since the market started taking a tumble after hitting new highs in February.
But what can your adviser advise during such a time of turmoil?
MarketWatch reached out to several financial advisers earlier this week to hear about what they’re telling clients these days. Here are five takeaways from what they shared with us.
They’re advising clients to stick with their current plan
For advisers, the inevitable mantra is: “Stay the course.” Most emphasize that they create plans for clients with long-term goals in mind — think retirement — and that those plans are designed to build in market corrections, such as the current downturn. Even when clients have more immediate financial needs, such as paying for a child’s college tuition, advisers emphasize that that’s discussed in advance and folded into the plan. Adjustments can be made to a portfolio, depending on a client’s changing situation and market conditions, but such changes tend to be done on a less frequent basis.
Of course, advisers still monitor the markets. If anything, many see buying opportunities during a dip. But even when they’re buying, they’re often doing so following an approach they may have worked out weeks, if not months, prior to the fact, such as deciding to purchase a particular stock or index fund when it falls to a certain level. They might also sell to harvest tax losses — tax planning is almost always a part of their work — but again, it all fits into a bigger picture.
The goal is to maintain solid returns over several years and hew to a broader strategy that factors in everything from cash-flow needs to estate planning. Which means they can’t get overly worried about the day-to-day movement of markets — and they can’t let their clients do so, either. “We really try not to be reactionary,” said Brian Schmehil, managing director of the Chicago-based Mather Group, a wealth-management firm.
Plus, even if an adviser wanted to tinker with client portfolios, they may feel stymied. Chat Reynders, chief executive of Boston-based Reynders, McVeigh Capital Management, said there’s too much in flux politically and financially right now to make any level-headed decisions.
“We’re avoiding sudden moves. I think we don’t have real information yet,” Reynders explained.
They’re telling clients this downturn is business as usual
Is there anything unique about the current market decline? Not really, most advisers say. While some clients may see President Trump’s market-shaking moves, such as the tariff policy, as being seismic and potentially leading to a much steeper, once-in-a-generation decline, advisers tend to see this downturn as a more typical one that can be expected after the sizable gains of the past two years. (The S&P 500 rose 24.2% in 2023 and 23.3% in 2024.)
That’s especially true given that the market has become more volatile in the current era versus previous periods. Easton Price, a Huntington Beach, Calif.-based adviser with Apella, a wealth-management firm, said that probably explains why clients who have been with the firm for at least a couple of decades are less panicky.
“They’ve seen a handful of these corrections. They kind of know the drill,” Price said.
They’re also telling clients to let history be their guide
If there’s another mantra in the advisory world, it is: “What goes down, must come up.” Advisers like to point out to clients that markets often rebound quicker than they might expect. Callie Cox, chief market strategist at Ritholtz Wealth Management, has outlined this in a chart she’s shared on her OptimistiCallie site, a platform often read by Ritholtz clients. It shows that when the S&P 500 declined by 20% or more after reaching a 52-week high, it saw a 17.7% return on average one year later. And when it declined by lower percentages, the one-year returns after the fact were still fairly solid.
“C’mon, how could you argue with these numbers?” Cox wrote.
They’re discouraging clients from going all-cash
During a downturn, advisers will field the occasional call from a client who says they’ve had enough and want to go fully to cash. And that’s where a bit of psychology comes into play: It’s the financial equivalent of talking someone off the ledge. Advisers say they generally try to be as patient as possible and hear the client’s concerns, but they also try to show them how making drastic moves in a panic isn’t the way to go.
“You’ve got to get people out of their reptilian brain,” said Scooter Thomas, a Birmingham, Ala.-based adviser with Savant Wealth Management.
Thomas said he’ll focus on how much money a client truly needs to protect, so they’re not moving the entire portfolio. He’ll also aim to have the client move that money into bonds or, at the very least, a money-market fund as opposed to strictly going to cash (“Where you’re getting nothing,” he duly noted).
If nothing else, it can’t hurt to give the client a good example of why moving to cash is so risky. Gil Baumgarten, founder and chief executive of Houston-based Segment Wealth Management, likes to share the story of a client who panicked at the onset of the pandemic and moved a significant portion of their portfolio to cash at what later proved to be the market bottom. Indeed, stocks rose by more than 15% over the course of the next two days.
“They were $1 million behind,” Baumgarten said.
They’re encouraging clients to keep calling — but within limits
You hire an adviser for a reason — and that’s to keep your money not only safe, but to also grow it as part of that aforementioned long-term plan. So, you shouldn’t hesitate to call (or email) your adviser when things turn south, most advisers say. It’s also why advisers will send out more frequent communications to clients, such as market commentaries, during tough times.
But there can be a limit to how many calls you should make. Aaron Cirksena, founder and chief executive of MDRN Capital, a firm based in Annapolis, Md., said there’s little point to calling periodically just to say you’re freaking out and need reassurance. That’s because, more often than not, the adviser is going to offer the same response (as in — you guessed it! — “Stay the course”).
Rather, Cirksena said it’s best to reach out when you have a specific question concerning a particular investment or strategy. Otherwise, those calls of generalized panic “will take time away from what I’m supposed to be doing” — namely, helping clients with their plans.
