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Wise to Be Healthy

To handle the strains, you need to be physically prepared.

Carl Richards, 11/30/2015

During my 20 years in the business, I’ve had to deal with some scary markets like the dip in 1998. Y2K didn’t get me down, and I had no problem helping clients stay the course through the tech bubble. But then came the financial crisis of 2008–09.

It was brutal for most of us. We needed to stay strong and confident for clients, all while dealing with our own financial concerns. Personally, I was scared. My income had gone down, I was worried about my investments, and the uncertainty was getting to me.

This uncertainty came to a head during a client meeting. These longtime clients were nervous. The only correct advice I could give them was to stay the course. They had a well-designed portfolio. It made zero sense to sell.

Although my advice didn’t totally satisfy them, my confidence helped them feel better. But as I walked out of the meeting, and with my hand still on the conference room door, I remember thinking, “Man, I hope I’m right.”

A few days later, a good friend reached out to me. He was close to selling his business. He asked me, “How are we going to invest the money?” At that moment, I was so full of uncertainty that the only answer I could give him was, “I don’t know.”

It turns out I wasn’t alone. In 2008, a survey of financial planners by the FPA Research Group revealed that 60% of financial planners “were rethinking how they were managing investment risk and [the] asset allocation for clients.” Now we know, given the weighty evidence of history, that the advice to stay the course worked. But what many of us experienced during 2008– 09 tells us something important.

The primary job of any real financial planner is to help clients make incredibly important decisions in the face of irreducible uncertainty. By definition, it’s the uncertainty that we can’t get rid of even after we’ve thought of everything else.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

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