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The Voice of Reason

“How will the COVID-19 pandemic impact me, my family and my investments?” was a common question my clients asked me over the past weeks and months. Life in the midst of a once-in-a-lifetime global health pandemic is chaotic and uncertain at best, enough to move us beyond the fear of the unknown, changing my clients’ lives ... and mine.

Some of Us Have Been There Before

I help my clients understand that events and occurrences – not quite the likes of an all-out pandemic – will happen from time to time causing massive upheaval in the world around us. At Hefren-Tillotson, we expect them and plan for them. As our friends at American Funds remind us: “We've been here before and we’ve survived.” Of course, there will be a bit of discomfort, but if survival mode is where many of our clients are now, since markets have significantly recovered from the March and early April lows, then they’re okay with it. They survived.

One of many things we pride ourselves on at Hefren-Tillotson is we view each client’s situation individually. Some clients are apprehensive; some are seeking guidance, but most just want to be heard. They wanted to hear my thoughts and the firm’s thoughts too. We are all on the same page, so I think that provided them comfort. Some clients did not follow our guidance, but many did, and they were thankful for receiving our full attention.

The ones who struggled the least were our seasoned veteran clients. Understandably, they had never experienced anything like this before in their early retirement years. They were still working during the volatile and wild market swings of  2008 and 2009, when almost half of all global wealth had been destroyed. But this time they are calmer and patient with everything. They recognize it isn’t our fault, it isn’t their fault, and it is our world at the present time. We already have a plan in place and we work through it with them.

We Have an Individualized Plan For Every Client

Each plan accounts for the unexpected. For clients taking income on a regular basis for their living expenses, we set aside a certain amount of “safe” money to last for several months in a “bucket,” as we call it, for that portion of their investments. This money is set aside for withdrawals and not as significantly impacted by major market swings, world events or crises as much as, say, a portion of the account that you wouldn’t need to draw from until five or ten years from now. So, this type of planning had a calming effect on clients, knowing that we did plan for assets to be taken out of their accounts that would not be impacted as drastically.

I feel good about my work, and the rest of the advisory team’s, at Hefren-Tillotson. We know we have a huge responsibility, and we helped provide the voice of reason. We lent an ear when our clients vented about what troubled them. Our being there to listen, and to provide guidance and confidence to our clients, their friends and families, is a major part of always doing the right thing for the client.

We Are on the Same Side

When clients told their friends and family members how proactive Hefren-Tillotson has been throughout the pandemic – by reaching out, providing guidance, and talking through their situations now and going forward – it actually made it easy for them to introduce us and offered the possibility of become part of our growing family. Some of these new clients had not heard from their previous advisors during this desperate time and they felt abandoned.

Clearly, the COVID-19 pandemic has put thousands of people in dire straits. The loss of jobs, wages and benefits hit people hard. I feel for them. And I also feel when one door closes another one opens, because it happened to me. I was at U.S. Steel for many years until I was in the crosshairs of a massive downsizing effort. The possibility of facing early retirement was a frightening life event for me. Thankfully, I was somewhat prepared by being involved in the company’s retirement benefit plans, and that experience opened the door to working with Hefren-Tillotson in 2015.

Don’t Give Up On Your 401(k)

When thinking about retirement plans and not being able to contribute to them, as a result of a layoff or a job loss, clients ask, “How am I going to move forward with my retirement planning, my life planning, and putting food on the table?” As a result of the CARES Act, it made it easier to access 401(k)s, but despite certain penalties being removed, we must stay focused on the long-term and only use the opportunity to withdraw money from 401(k) plans as a last resort.

For those employed, we remind them how important it is to continue contributing because of the dollar cost averaging approach to investing and buying during low points. By continuing to contribute as much as possible now, you have the opportunity to be better prepared down the road when you really need it. This type of thinking reminds us how important it is to be prepared and to have a plan – one that can be adjusted and flexible as various events unfold.

The main difference with the market volatility associated with the COVID-19 pandemic for most of us, is the speed in which it occurred. We literally saw the fastest 30-day drop in the history of the S&P 500. And then, we saw one of the best 50-day turnarounds in history. It might have been difficult for people to wrap their heads around the enormity of it all since the term “Coronavirus” was associated with everything, even the stock market rally itself. 

We take pride in what we do for all of our clients at Hefren-Tillotson. If you would like more information, or have questions regarding your existing plan, please let us know. We would be happy for the opportunity to be your voice of reason.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.