From the desk of Robert Steinberg, JD, CPA, CFP®
Early in my career, I learned that it is difficult to predict how clients might react during market downturns. As investors close in on and enter retirement, the more likely they are to make reactive emotional decisions in regards to their investments. While these reactions appear rational at the time, eventually they work to the detriment of a long-term financial plan. This tendency was highlighted by Fidelity in a June 15, 2020, Wall Street Journal article entitled “Investors Approaching Retirement Face Painful Decisions”. The data presented indicates that “Nearly a third of investors ages 65 and up sold all of their stockholdings sometime between February and May, compared with 18% of investors across all age groups.” While my observation is purely anecdotal, I doubt many of these total stock portfolio liquidations were recommended by an investment professional. Bouts of market duress often end up being the times when financial advisors can add the greatest amount of value.