Wise Investing

Three Questions to Ask Your Advisor During Market Volatility

In times of market volatility, it’s vital to stay the course and not panic. However, it’s understandable to feel a little uneasy during these times. When you’re seeing the market go down, it’s natural to wonder how that’s going to impact you. If you’re apprehensive about your assets, it’s important to have a conversation with your financial advisor so you fully understand what you own and how this impacts your financial picture. Having such a discussion can help shed light on the situation and alleviate worries.

As financial advisors, it’s our job to help clients make educated decisions despite market conditions. Before heading into the next meeting with your advisor, think about the questions you want to ask if the market isn’t hitting all-time-highs. Below are a few questions that we like to address with clients which can serve as a starting point for what to discuss during times of market uncertainty.

Can we review my financial plan?

There’s a difference between a financial plan and funding a 401(k). While investing in a 401(k) is important, it’s also essential to formalize goals, aspirations, risk tolerance and a retirement date. Market volatility is to be expected and your financial plan should withstand times of underperformance. If you’re uneasy about your holdings, now may not be the best time to make changes, but it might be a good time to start working with a financial advisor to create a formalized plan or meet with your current advisor to really understand the plan you already have in place.

What risk am I taking?

Evaluating risk tolerance is an essential part of building a financial plan. This helps allow you to be comfortable with the risk you’re taking despite market conditions. When equities are performing well, people are naturally more aggressive and willing to take more risk, but when the market falls, many investors are tempted to pull out. This is why having a baseline for risk tolerance is so important and needs to be independent of market conditions. For example, clients at Girard take a risk-profile questionnaire tied to behavioral finance to test what risk they are willing to endure. Having this baseline is important, so when we see an inevitable downturn due to market cycles, investors and their portfolios are better prepared to endure it.

What exactly do I own?

Knowing what’s in your portfolio is key to determining if you’re properly diversified and ready to weather a downturn. Diversification across equity, fixed income and other investments can help investors stay the course during a market correction or rout. This is because some areas of the market will perform better than others at certain times, and diversification keeps investors focused on investing for the long-term. Diversification can help dampen losses in downturns and even out the gains when assets spike.

By speaking with your advisor to understand your financial plan and how it fits your personal situation can make you less likely to listen to the noise that comes along with market turbulence. I’ve seen it firsthand – we receive far fewer worried calls from clients during market volatility since we started making risk-tolerance assessments a standard practice. Knowing your risk tolerance allows investors to trust the process and realize their overall plan should work for the long-term as long as they stick to it.

If you would like to get in touch with a Girard advisor, please feel free to contact us to discuss how our team can work toward creating the right plan specifically for you.

Girard is a marketing name used by Univest Financial Corporation to provide (1) investment and wealth management, fiduciary services and trust services through its subsidiary Univest Bank and Trust Co., (2) specific fiduciary and investment advisory services through Girard Advisory Services, LLC (3) securities products, insurance products and brokerage services through Girard Investment Services, LLC,  a registered broker-dealer and member of FINRA and SIPC, and a licensed insurance agency, and (4) investment management and related products and services for Pennsylvania municipal entities through Girard Pension Services, LLC. Investment products and services are not FDIC insured, not a bank deposit, not bank guaranteed, not insured by any federal government agency and are subject to risks, including possible loss of any principal amount invested.