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Looking for a Confidence Boost? Schedule a Meeting With a Financial Planner

In times of economic angst, a conversation with a money manager is highly recommended.

I use economic studies knowing full well they’re not 100% accurate. Most studies and surveys have a confidence level of 95% or so, with the more people you talk to, the higher degree of accuracy.

That said, good, well-researched studies and surveys can shine a light on myriad personal financial issues and steer us down a path to making better, well-informed money management decisions.

With that thought in mind, I spent the morning reviewing the latest AICPA financial planners survey of 870 money managers https://www.aicpa.org/interestareas/personalfinancialplanning/community/pfptrendsurvey.html – this one focused on investment decisions made by Americans at the start of, and during, the COVID-19 pandemic back in March.

There’s loads of good stuff to mull over in the report, but it’s the main takeaway that’s worth a closer look. 

It turns out that despite the initial stampede out of stocks and into bonds and cash, most Americans working with a financial advisor didn’t change much of their investment portfolio at all (although many did do some form of portfolio rebalancing, which is a common result after any meeting with a financial planner.)

While the AICPA does exhibit some pom-pom waiving on behalf of its financial planners, the survey data does indicate that, especially in times of financial strife, Main Street Americans should talk about their personal finances with a trusted financial advisor.

This from the survey:

“The COVID-19 pandemic’s initial impact on the U.S. economy caused extraordinary stock market volatility and tens of millions of job losses, prompting emergency federal programs to mitigate the damage,” the survey reports. “During this time, CPA financial planners were on the financial frontlines, speaking with their clients early and often, reducing their anxiety by making them feel more comfortable that their financial plan would allow them to weather the pandemic.”

As a result, the AICPA concludes, the majority (70 percent) of financial advisory clients “didn’t require changes to their financial plans and for those who did, the changes were mostly minor.”

The study goes out of its way to hammer home the point that communication between client and advisor is critical in the financial planning process – especially during times of economic anxiety.

“Through early conversations, financial planners helped boost their client’s confidence in their financial plans,” the survey states. “When asked, a little more than three-fourths (76 percent) of CPA financial planners said they were speaking with their clients about the impact of COVID-19 on their personal finances by the middle of March, with more than four-in-ten (42 percent) saying they had their first COVID-related conversations with their clients by the end of February.”

The survey also found that 80 percent of money managers believed their clients had a “higher level of stress about their financial plan than normal.”

Of that group, 62 percent of them “felt increased confidence in their financial situation after speaking with their CPA.”

“The benefit of the proactive planning process is that through speaking with clients regularly you establish trust while gaining a strong understanding of their long-term goals and risk tolerance,” said Dave Stolz, CPA/PFS, chair of AICPA’s PFS Credential Committee. “That’s why we see that clients largely left conversations with their CPA financial planners feeling more confident in their plans. And for most clients, there was already an effective plan in place that only required minor tweaks, if any, rather than wholesale changes.”

Stolz has a point and it’s one that everyday investors should bear in mind. The more you talk to a good money manager, the more confident you are in your overall financial plan. And the more confident in your financial plan, the fewer rash moves you’ll make that lead to investment portfolio decline.

That view isn’t based on 100% investment accuracy. But I’ll take 95%, especially in times of economic strife, any day of the week.