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When My Widow Clients Turn to Me for Guidance

My profession is often compared to the medical profession. And while it is true that clients and patients want their doctor or advisor to be ethical, trustworthy and knowledgeable, they also expect them to possess high standards, provide top-level customer service and act in their clients’ or patients’ best interest.

As a trusted advisor to my clients, I believe these are realistic expectations. The promises I make to myself and to my clients – to be available and attentive, eager to listen when they turn to me for guidance, and being empathetic to their needs – are likely the only ways to prescribe clear and rational solutions during such unprecedented and troubled times.

Avoid the Fear and You Avoid the Mistakes That Follow  

My clients are a mix of working and retired women. I have called them all during these weeks at home and discovered some didn’t want to talk about their finances at all; they enjoyed the chitchat and having somebody to talk to. Without family nearby, they endured the daily onslaught of dreadful COVID-19 pandemic minutiae by themselves.

Others, of course, did want to talk about their finances. When I called one client to make a recommendation, she said, “Honestly, I am having a hard time thinking right now because I have a health procedure that I am going through this week. I’d appreciate it if you brought my daughter-in-law in on the call to help me make the decision.” And that was perfectly fine with me. The daughter-in-law was instrumental and complimentary in her support of my recommendation and we moved forward. 

However, I spoke with another client on a day when her accounts were down and the market was in a minor rebound. She was convinced that her accounts were recovering and wanted to get out – but then get back in a couple of weeks later when it would dip. I had to ask why. “Because more bad news is coming,” she said. Fear has been dominating the headlines and the airwaves, and people believe whatever they see and hear. We’ve talked about time in the market before. After I explained why I didn’t think hers was a good strategy, she said she believed me and was “not going to hold it against me” if the market went down again. “Oh, it will,” I said.

That’s Why We Have MASTERPLAN®

The CDC tells us not to touch our faces, so I adopted the same rule to portfolios: “Do not touch your portfolio during this pandemic.” Our MASTERPLAN® is in place for the very situations I cite in this article. Everything is clearly documented. We review and reassure our clients that they have 18 months of spending needs in cash; 4 years of income needs in bonds, and 5 years before they even need to use the proceeds of stocks, primarily, the basis for why their portfolio was developed this way.

We created MASTERPLAN® for times like this so we don't have to worry about the market, we can give it time to recover. And then, in the next few years, we’ll look at the cash again and, if necessary, we’ll go into bonds. Without this type of structure, we wouldn’t be able to protect and advise our clients like we do, as well as set them on the path to their financial goals. As a privately held firm, we’ve chosen from among the best world-class money managers and securities without the conflicts of interest or restrictions involved with the proprietary products you’ll find at other financial planning firms.

One is the Loneliest Number

A client wanted to liquidate her accounts but maintain a ROTH IRA she personally managed with us. I didn’t quite understand her reasoning since these are professionally managed accounts with world-class investment managers. So, not only did she have me, and the investment managers of the discretionary accounts, she also had the managers of the funds. I dug into the details to explain to her all the different layers of servicing that she was receiving, beyond the attention that I give it, and of those who look over the portfolio. She wasn’t seeing the changes made. I explained that when you look under the hood, you see the changes being made to the portfolio. This made sense to her. But what resonated the most with her was when I reminded her that her portfolio wasn’t going down as much as the S&P because of the cash and bonds that she held.  She forgot that her portfolio performance wasn’t a mirror image of the S&P.

During times like this, I can’t imagine NOT having an advisor (or anyone else) to talk to or get advice from. Understandably, clients are scared, some more than others, and perhaps a little off-balance too. I am their voice of reason and am here for them. They are cautious about their spending and it’s forced them to firm up their budgets.

In fact, one lady needing guidance is inching toward the danger zone. Her equity is in her house. She’s received bad advice over the years and her portfolio has dwindled down. So it’s “back to the buckets,” cash and the bonds. She has enough money for her daily expenses in the reserve, and enough time for stocks to rebound. Now, however, she must expect more short-term volatility and ride it out.

We always determine the objective. Three-to-six-years out, there is plenty of opportunity for recovery. Sure, we’ll see volatility, but we’ll also see opportunities within various sectors that will probably be attractively priced. For the most part, I believe the outlook is positive and I remain hopeful. After all, we are all in this together.

Are you looking at your statements and getting nervous at what you’re seeing? Has your portfolio weathered the storm? Is it positioned for the next storm that comes along? We’ve weathered the storms for more than 70 years now. If you need someone to guide you through, while also providing you with professional advice you want, need and deserve, please contact me at Hefren-Tillotson today. I would love to talk with you. Stay safe.

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.