Amid inflation, high interest rates and an uncertain market, people are becoming increasingly concerned about their finances. If you’re a financial advisor, your clients may be asking you some difficult questions right now—some of which don’t have a set answer.
Even with these challenges, however, you can still use your expertise to guide your clients toward a sustainable financial future. Below, the members of Forbes Finance Council share 12 questions financial advisors are regularly hearing from clients right now and how they’re answering them.
1. Are we headed for a recession?
As advisors, clients are always asking us to look into our “crystal ball,” with the current question being, “Are we headed for a nasty recession?” It’s a fair question, but one with misplaced energy, in our opinion. Instead of trying to “outsmart” an unknowable outcome, advisors should focus on finding resilient investments (traditional bonds are not the answer!) that will be more insulated from market downturns. - Jeffrey Sarti, Morton Wealth
2. Are we in a recession, and what does that mean for my plan?
Clients want to know if we are in (or about to be in) a recession. We tell them we position portfolios for success over the long term. Markets fluctuate, and as long as their asset allocation accounts for their liquidity needs, risk tolerance and time horizon, they will meet their goals. We review their financial plans and make sure their asset allocation is in line with their long-term goals. - Aviva Pinto, Wealthspire Advisors
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3. When should I enter the market?
People are concerned about a looming recession and stagflation in the coming year, and many are trying to stay on the sidelines and get in when the market is at the bottom. No one can predict the market, so invest smart and always be looking for good investment opportunities. - Rakesh Bansal, 7C Equity Group
4. Is now a good time to invest?
With all of the crosswinds—such as market decline, inflation, recession, world conflicts and rising interest rates—many clients ask, “Is it a good time to invest?” The media and individuals often preoccupy themselves with short-term volatility and consequences. Why would you focus on short-term concerns and possible unrealized losses when investing for the long haul? Now is always the best time to invest. - Louis Cannataro, Cannataro Park Avenue Financial
5. How bad will inflation get?
Many clients are wondering how bad inflation will get. This is usually both a short-term and a long-term concern. In the short term, inflation makes budgeting much harder. But looking at the long term, inflation could erode the spending power of nest eggs that took many years to build. My advice is to focus on things you can control: spending, saving, producing income and investing wisely. - Todd Sixt, Strait & Sound Wealth Management LLC
6. Should I take on debt to start a business?
Taking on debt can be scary, and it’s a risk, but so is starting a business. The key to taking on debt is never taking on more than you can pay. It’s good practice to take on debt that is much less than you can afford. Building business credit helps you in the long run, and one of the ways a business can do that is to take on debt. - Jared Weitz, United Capital Source Inc.
7. How might current events impact my long-term goals?
I see a lot of clients wanting to know how the combination of market downturns, increased inflation and a recession impacts their long-term goals. As financial advisors, we should factor each of these possibilities into the long-term financial plans of our clients. Therefore, when we’re faced with these questions, we can show them how we’ve prepared and that their plans remain on track. - Justin Goodbread, WealthSource Partners, LLC
8. How do I know when to sell, hold or buy?
The most common question we hear from clients is, “When is the right time to sell, hold or buy?” Everyone is looking at how to maximize their returns and minimize losses in the highly volatile market conditions we are seeing today. The best thing to do is not look for a universal answer; everyone’s situation and goals are different, and with enough time, even the most volatile cycles normalize. - Joseph Orseno, Tiltify
9. How much worse will the markets get?
Right now, many clients are wondering how bad the markets might get. A prepared financial advisor should be able to discuss specific portfolio activity executed during the recent market cycle as it relates to opportunities in the marketplace. Volatility is not something just to be weathered, but an active discovery process toward new or adjusted allocations. - Ivan Illan, Aligne Wealth Advisors Investment Management (AWAIM®)
10. What’s my risk in a down market?
Investors are still worried about a drop in the markets. Advisors need to know the risks their clients are facing, measured in a way clients understand. If a client’s downside risk is explained correctly, an advisor can get them into the correct risk bucket. Show the investor the historical recoveries and it will help them gain confidence in their financial plan. - Robert Miller, Frontier Asset Management LLC
11. When should I sell my business?
People often ask about selling their businesses. Timing is a component, but readiness is far more impactful. A seller should prepare approximately two years from an expected transaction. Rushing to market rarely works. Do the homework and grow your business value. - Matthew Goldston, PKF Texas
12. How can I ‘recession-proof’ my business?
A lot of clients want advice on how to “recession-proof” and “pandemic-proof” their businesses. Fortunately, a lot of the same things that have always been advisable are still some of the most reliable strategies. Hire proactive, reliable CPAs/financial advisors; keep a close handle on day-to-day financials; have a great, consistent relationship with your banks; and keep a cash reserve on hand. - Julio Gonzalez, Engineered Tax Services Inc.
