- 2-Minute Article
- Oct 25, 2019
3 Questions to Ask Your Financial Advisor During Market Volatility
Knowledge can help put you at ease in turbulent times.
- What should I ask my financial advisor if the markets are volatile?
- What steps can I take on my own during market volatility?
- What can past market performance tell me about today?
With a 24-hour news cycle and constant market performance updates at your fingertips, you may wonder whether to react any time there’s a headline about market volatility. However, sticking to your long-term plan may be a wiser option than making a change to your investments. In fact, the average investor typically underperforms the broader market because of emotional decision-making – i.e., fear of loss can make you sell at the first sign of volatility, when staying the course would ultimately result in higher performance.1
Your financial advisor is your best ally when it comes to helping to manage your retirement plan during all market conditions, but volatility can be a prime opportunity for you and your advisor to have productive conversations. Ask these questions to help understand more about what’s driving the changes and what you should – or shouldn’t – do about it.
1. “The Market Appears Disrupted. What Should I Do?”
If you’re concerned about a rocky period in the markets and aren’t sure if you should be taking some action, reach out to your financial advisor. They may suggest a meeting to reassess your financial strategy. You can sit down and determine where you are relative to both short- and long-term objectives. It may be time to take a look at your needs and discuss whether goals have changed. Changing needs, rather than short-term volatility, could signal it’s time to consider a new strategy or product.
2. “Is This Normal?”
When signs of volatility appear in daily headlines, it can be helpful to understand what’s happening in the broader context of historical stock market performance. The current performance may be affecting your portfolio in the short term, but looking at other examples and with a longer lens can help put it in context. For example, on one day in August 2019, major indices lost around 3%, making it the worst day of the year to date. It’s helpful to know, however, that when markets closed that day, they were still up around 10% since the start of the year.2 (Please note that past performance is not necessarily indicative of future results.)
3. “Can We Review My Risk Tolerance?”
It is possible that your risk tolerance or goals from the past have evolved and your strategy hasn’t been updated to reflect that. Having this conversation with your advisor can help you realign your investment strategy to better match new goals or an evolved tolerance when it comes to volatility.
Changes in the market are a given, but they don’t have to derail any long-term plans. Market disruptions happen and they can be a great opportunity to connect with your advisor, review your overall plan, and even learn about new ways to get closer to your financial success.
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