Weekend Reading for Financial Planners Mar 21-22

23 Mar    Investing News

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the news that the Federal government is officially moving the tax filing deadline from April 15th to July 15th, not only allowing tax payments to be deferred but the entire tax filing process (though it remains to be seen whether/how states will follow suit as well, and those seeking tax refunds to get cash in their pockets now will likely still want to file as soon as possible!).

Also in the news this week is discussion that the U.S. is considering whether to issue 50-year(!) government bonds to finance the looming coronavirus economic stimulus package to take advantage of ultra-low interest rates, and that the economic stimulus package may also include a provision allowing the U.S. Treasury to provide a backstop guarantee to money market funds to prevent the risk of recreating a repeat of the panic run on (institutional) money market funds that happened during the 2008 financial crisis.

From there, we have a number of articles about investor behavior during the current market volatility (and how advisors can help), including a look at the data showing that in reality most investors do not panic sell (but the few that do can be especially poor under-performers as a result), how your brain reacts emotionally to market volatility in a form of fight-or-flight response (for which rational explanations of markets don’t necessarily help), and some tips on how to reassure clients during these volatile times (and even remind them that you’re available to help their friends and family who may be in search of a financial advisor to help them through the volatility, too).

We also have a few articles on the emerging practice management implications of the recent market decline, including why advisory firms that didn’t run ‘healthy’ 20%+ profit margins may now face forced layoffs to right their expenses relative to their revenue and the fees they charge, how market volatility and potential layoffs may at least create an opportunity for firms to refocus themselves for the future, and why the recent market decline may not necessarily tank the valuations for advisory firms that want to sell (at least, as long as the seller is willing to bear more of the risk by making a portion of their price contingent on the market recovery that’s anticipated in the coming years).

We wrap up with three interesting articles, all around the theme of dealing with our own thoughts and personal disruptions caused by coronavirus: the first provides tips about how to get comfortable and find more ‘calm’ in the face of a pandemic that may feel particularly challenging to fight (given that it’s an enemy we can’t see, and one that forces us to socially distance and isolate when, as human beings, we tend to come together in times of stress); the second provides a powerful reminder that it’s “not crazy” to be fearful of covid-19 and to be thinking about the potentially challenging long-term implications, and the importance of finding others who share (or at least are willing to listen to and hear) your concerns to talk them out; and the last provides an uplifting reminder that the wave of meetings, events, and activities now being cancelled is unexpectedly presenting us all with a “gift of time”… raising the question of what those “if I had more time I’d get around to it” activities and goals we’ll all be able to take up, now that the time is being forced on us anyway?

Enjoy the ‘light’ reading!

Read More…