Financial advisors are busier than ever these days. With the stock market in flux and the economy on shaky ground, advisors are looking towards alternative investment news and other ways to keep their clients’ money safe. And more people than ever before are turning to them for guidance. So what are financial advisors telling their clients? Here’s a closer look at some of the most common money and investment advice that financial advisors are giving right now, and how they are responding to the current market conditions.
The economy has its ups and downs, and that is totally normal. But the current climate feels a lot more unpredictable at the moment. This started with the Covid-19 pandemic, when stocks tanked and people were left scrambling. Then, there was a brief rebound followed by more volatility. And most recently, we’ve seen the market surge to new heights, yet many people are still struggling. Global instability such as the war in Ukraine and an international energy crisis are making things feel a little worrying for many people.
All of this has left financial advisors with a lot to think about – and their clients are feeling anxious too. So what are advisors telling their clients in the current climate? Here’s a look at some of the most common advice.
Financial Advisors Are Urging Their Clients To Diversify
With the stock market volatile and unpredictable, financial advisors are telling their clients to diversify their investments. This means investing in a mix of different asset classes, including stocks, bonds, and cash. By spreading your money across different types of investments, you can minimize your risk and protect your money if one particular asset class takes a hit. Included within this is the need to ensure investments are spread across different industries too. This means that if one sector is struggling, your portfolio as a whole won’t be affected as much.
Many Advisors Are Moving Away From Stock Picking
In the past, financial advisors often recommended picking individual stocks. But in the current climate, this is becoming less common. With the market so volatile, it’s harder to predict which stocks will perform well and which will tank. So instead, many advisors are recommending index funds or exchange-traded funds (ETFs). These provide a diversified mix of investments, so you’re not putting all your eggs in one basket. And they’re often cheaper than individual stocks, so you can save money on fees, too.
Advisors Are Recommending Alternative Investments Too
With the stock market so unpredictable, financial advisors are looking towards alternative investments. These are investments that aren’t directly linked to the stock market, such as real estate, gold, and private equity. By investing in alternatives, you can protect your portfolio from market volatility. And if one particular asset class takes a hit, you should still enjoy some degree of certainty that your investments as a whole are quite safe. Which alternatives you should invest in depend on your particular circumstances, and which part of the world you are in. Real estate is an attractive option for many people, but in certain countries, people with multiple properties are becoming more heavily taxed, and incoming legislation is making it less attractive as an investment option.
Some Advisors Are Advising Caution
With so much uncertainty in the world, some financial advisors are urge their clients to tread cautiously. This may mean holding off on making any big investment decisions for the time being. Or it may mean only investing a small portion of your portfolio in stocks, and keeping the rest in cash or bonds. Advisors may also recommend that you keep some money in reserve, so you have access to cash if you need it.
Caution also means having a little bit of money in different places. Some can be linked to the stock market, but some could be in savings accounts that offer a decent interest rate and give you some tax breaks. During this time, financial advisors are also encouraging their clients to re-do a questionnaire on personal attitudes to risk, in case they are less willing to take extra risks in the current economic climate.
Do What You Need To Do To Protect Yourself
Most financial advisors in the current climate are telling their clients to do what they need to do to protect themselves. For most people, this includes not taking unnecessary risks with their investments, while continuing to pay into funds designed for their long-term benefits, such as personal pension funds. This is because even though the stock market may be struggling now, it’s still one of the best places to grow your money in the long run. And if you did your due diligence to select a stable and worthwhile pension fund – and you check in on it regularly – you should not walk away from it. Ultimately, this could affect your long term financial outlook.
This is just a snapshot of what financial advisors are telling their clients in the current climate. As always, it’s important to speak to a qualified professional before making any decisions about your finances. And remember, the market will always go up and down – the key is to ride out the waves and stay focused on your long-term goals.