Take a Step Back in Times of Financial Uncertainty

We understand the instinct to act quickly in times of financial uncertainty. From 2008’s Great Recession to the 2020 coronavirus crisis, stock market fluctuation and other economic concerns can cause investors to hesitate to stay on track with their wealth management path. During these times, you may have been tempted to act quickly: to sell all your stock, to stockpile cash, or to worry endlessly at night.

At Marshall, we’ve seen people through these crises and more (going back to Black Monday, 1987’s stock market crash). Along the way, we’ve learned that our clients do best when they focus on what’s most meaningful, making it easier to review and react to their financial risk during unsteady times.

First, let’s look at why you may be feeling the impulse to move in a different direction.

The 3 Aspects of Risk: Perception, Ability, Willingness

Three things tend to affect your financial behaviors while stressed:

Perception of Risk

When you’re unsettled by uncertainty, look at why you are perceiving risk. Where are you getting your information? The media’s news of the day is designed to stop people in their tracks, such as stories of hospitalizations and deaths presented with bold black and red graphics rather than good news about vaccinations and rebounds in the market. And how does the news affect your particular situation?

Ability to Take Risk

While your perception and tolerance of risk may be high, ultimately your ability to take risk is a function of the amount of money you have and need, and your timeframe for reaching your goals. If you are younger, you have plenty of time to recover from any short-term losses, and if you are older, your portfolio may contain fewer volatile investments. Just because the news is bad for some may not mean it is bad financially for you.

Willingness to Take Risk

Your willingness to take risk is highly individual, based on your personal money biases. Your thinking about money is likely influenced by how you grew up, who you surround yourself with now, and your overall confidence around your financial abilities. A trusted advisor will likely ask you: What are you comfortable with? If we take an action you’re considering (like cashing out your 401K), what could happen? What could happen if we don’t do that?

Identify Goals for Your Money

Understanding your instincts to act on risk can help you to reassess your sense of urgency. So what can you do instead of reacting to financial stress? Take this time to start planning for your financial future. Assess your values and your vision to get a total picture of your ideal life, including:

  • Career and business
  • Family
  • Lifestyle
  • Health
  • Community and philanthropy

This activity can help you take a step back and look at the bigger picture. Envisioning your ideal life sets the foundation for a plan that is proactive rather than reactive.

From there, you can start to build a financial foundation that balances risk and goals.

Set a More Secure Foundation for the Future

Developing a total wealth picture based on your goals for today as well as the future allows you to focus on the fundamentals: reducing your risk and maximizing your opportunities through time, diversification, and consistency.

And it’s easier not to go it alone. Having a trusted thinking partner helps you make better decisions. A recent study by Charles Schwab shows that almost half of people who work with an advisor are very confident in their investment decisions, versus less than a third of people who invest on their own.

An advisor can help you look objectively at the world and how current events affect your plan now and over the long term.  You’ll have more peace of mind knowing you have a plan designed to weather the economy’s ups and downs and a trusted partner to help you stay the course.

To learn more about working with a wealth advisor, contact our team.

Or download this handy month-by-month checklist for managing your finances, career, family and life, and community contributions to help you live the life you want today and in the future.

Source: Schwab.com. “Schwab 401(k) Participant Survey 2020-Income.” Schwab Brokerage, Sept. 2020, www.aboutschwab.com/schwab-401k-participant-survey-2020-income.


Disclosure: Marshall Financial Group, Inc (“Marshall Financial”) is an SEC-registered investment adviser with its principal place of business in Doylestown, Pennsylvania.   This newsletter is limited to the dissemination of general information pertaining to Marshall Financial Group’s investment advisory services.  Investing involves risk, including risk of loss.

This newsletter contains certain forward‐looking statements (which may be signaled by words such as “believe,” “expect” or “anticipate”) which indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward‐looking statements. As such, there is no guarantee that the views and opinions expressed in this letter will come to pass.

For additional information about Marshall Financial, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov).  Please read the disclosure statement carefully.