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  • Industry Overview: Wealth Management
     

  • Fear Not

    Work the Plan

    Good Citizens

    Help Wanted

     

     


    Fear Not

    Choosing to work with a financial advisor is motivated by more than hopes of greater returns; the advisor-client relationship and the informed guidance it offers can also provide peace, an aspect that increases in value in a volatile economic climate. During COVID-19, area advisors have depended on these bonds of trust plus previously made financial plans to combat clients’ fears. “The challenges associated with COVID-19 have given financial advisors the opportunity to serve our clients by reassuring them of the financial plan we have in place and reducing the anxiety that comes with uncertainty,” Overby said.

    Bad news and the unpredictability it can cause are givens in today’s world, but the pandemic really shook financial markets and in turn, many investors’ resolve. “Negative events are not unusual,” Barry Prim, Senior Client Consultant at Warren Averett Asset Management, said. “They happen fairly regularly. What was unusual this time was the scope of the event, and the government’s response to it. Right or wrong, shutting down the economy for any reason will create disruption and economic pain.”

    Prim says the “revaluation of risk” this brought on for clients is not necessarily a problem, and actually something he recommends doing every year, no matter the circumstances. Shaw Pritchett, Principal at Jackson Thornton Asset Management, agreed and stressed that emotions are the enemy when it comes to successful wealth management strategies, calling the virus the “challenge of the moment,” but only one of many. “The news related to COVID-19 is scary and has created anxiety in the minds of investors across the world. When we talk to clients, we remind them that when we opened their account, we agreed on an investment strategy that was appropriate for them at a time when they were not emotional,” he said. “There was reason for concern before COVID-19, and there will be a reason for concern after COVID-19. Acting out of emotion is never a good investment policy, so we continually remind clients that this uncertainty shall pass like all the others before.”

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    Work the Plan

    While this wisdom can help calm clients, the real cure for client jitters is a well-researched, personalized financial plan, as Dubina explained. “My mission is to remind each client what their objectives for their wealth have been, are presently and plan to be in the future,” he said. “Unless these plans have changed, we remain focused on their plans for the future and stay the course.” Pritchett echoed Dubina. “The best plan is to stay the course, as no one has consistently proven that they can time the market. More fortunes have been lost than made trying to prove that statement wrong.”

    Today’s turbulent times only underscore the purpose and importance of these plans. Pritchett likened wealth management planning to preparing for a trip. “If you were to go on a vacation, would you get in the car and drive until you found the perfect place? Most likely, you would put in some effort to plan ahead and design a trip that met your needs and wants, and you would create a roadmap to show you how you would get there,” he said. “The same applies to wealth management. To have a successful experience, you need to plan ahead to make sure you create the roadmap required to meet your financial needs.”

    Wild market swings and resulting questions also highlight the role a financial advisor plays in crafting and executing a solid plan, which, thanks to multiple considerations, can be a complex undertaking. Prim outlined the long list of considerations that form the foundation of any plan. “You want to be consistent to who you are and think long term if you can. Of course, long term means something different based on each investor’s age, risk tolerance and unique situation, but market volatility like we have experienced this year can cause many to shun investing in the equity markets.

    Or worse, to try and time the swings by coming in and out of the stock market,” he said. “Both ideas are usually incorrect and can negatively affect returns. A better path is to make a plan for where you want to be in a certain time, discover your risk tolerance, then implement a unique, diversified portfolio to get there. In the long run, statistics have proven that the consistent investor will have better results with a diversified approach that includes equity exposure.”

    Prim understands the long run as well as anyone. He’s been in the wealth management industry since 1990. During the last three decades, he’s seen multiple changes. “From the evolution of exchange traded funds and online trading platforms to the recent introduction of crypto currency, access to the markets has changed drastically over the years,” he said. “Investors can now buy and sell securities on their phone in an instant, which is a far cry from how it was done in 1990.” Still, according to Prim, there’s a constant. “What has not changed is the need for most investors to get help. It can be very overwhelming to make sense of this rapidly changing market,” he said.

    Overby has seen the recent economic uncertainty shake the confidence of DIY investors and bring people to or back to financial advisors as they seek answers and understanding. “When volatility strikes and economic uncertainty appears, investors become concerned and turn back to financial professionals for help,” she said.

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    Good Citizens

    The effort River Region wealth management professionals put into aiding their clients is matched by a commitment to community. “Members of the wealth management industry are good community stewards,” Pritchett said. “Advisors in our firm and our colleagues at other companies are heavily involved in charitable causes and community service projects in the area.”

    Prim shared similar thoughts. “Montgomery has been blessed to have a large, diverse set of wealth management offerings for decades. This has created many job opportunities and impacted many lives,” he said. “Go to any charitable event and take a look at the donor list. It will be filled with numerous wealth management firms and individuals.”

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    Help Wanted

    Members of the wealth management industry may be doing their part to improve the quality of life here, but the industry itself is facing its own challenges. A major hurdle is the shrinking size of available financial advisors. “Our industry always needs talent, and now it is even more in demand,” Prim said. “With technology advancing the delivery of our services, we are in need of young people who want to help clients reach their goals.”

    Dubina agreed, calling the smaller number of young people currently entering the field in the next 10 years, one of his industry’s “biggest challenges.” “The role of a wealth advisor is, and always will be, important for folks in all walks of life,” he said. “Due to the lack of new, young professionals, I do worry about the financial literacy of the next generation without access to wealth advisors from their generation.”

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