Looking for the pothole around the corner


Looking for the pothole around the corner

After the harsh winter of 2014, many streets were left with large and encompassing potholes. In my hometown, the city had to repave a stretch of a major downtown street because it was essentially impassable. With the Farmer’s Almanac predicting an even a worse winter for 2015, we’re already talking about the storms and havoc heading our way. 

Unfortunately, we as financial advisors don’t heed the same warnings, and we’re positioned to repeat the same mistakes of the past. Today, many signs point to a market correction – a potential healthy correction of 10 percent or less. While it appears to be smaller than the financial crisis of 2008-09, it nonetheless will take trillions of dollars from investors. 

Given that our clients are five to six years closer to retirement from last major correction, it should be more imperative to protect their wealth. Unfortunately, I continue to hear advisors satisfied with their clients’ account values and assets under management going up without regard to risk and the opportunity to mitigate those risks.  

With today’s product portfolios, many advisors miss the opportunity to lock in gains from existing accounts, especially retirement accounts. I would estimate that 50 percent of our clients would like to take the gains from the last five years off the table and make sure they don’t repeat the claw back they experienced in 2008-09. 

While fixed annuity returns remain low, the risk associated with a potential market correction would outweigh the loss in account value. Look at your client base. Which ones called you the most or came to you as a new client during the last correction? Talk to them about their interest in taking some of their gains off the table. You’ll be looking out for their potential pothole around the corner.

The Bottom Line: Many clients have recovered from the financial crisis five years ago, and they’d like to protect what they’ve gained. Contact them now to help take those gains off the table.