Perspectives: Insights for Advisors

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| Perspectives Blog | Should an advisor move during volatile times?

Should an advisor move during volatile times?

By Howard Diamond - Volatility, according to Merriam-Webster, is defined as something that is “likely to change in a very sudden or extreme way.” That’s certainly an appropriate descriptor for the activity the world stock markets experienced through August and the start of September. With these vast market swings, we have been asked time and again if it has had, or will have, a negative impact on financial advisor movement.

Letting fear govern your future is likely to result in a destiny you’re not happy with.

Volatility, according to Merriam-Webster, is defined as something that is “likely to change in a very sudden or extreme way.” That’s certainly an appropriate descriptor for the activity the world stock markets experienced through August and the start of September. With these vast market swings, we have been asked time and again if it has had, or will have, a negative impact on financial advisor movement. To that, we respond with a resounding “NO.”

While the market’s gyrations certainly come up in conversations with advisors who are considering a move, most often it is just an afterthought. Just like financial advisors counsel their clients not to let fear govern their decision making process, we guide advisors in the same fashion.

Market volatility is just a natural corollary to market investment. It should not determine an advisor’s future particularly if he has deep client relationships, as well as confidence that he always puts his clients’ best interests first. Advisors who are unhappy or unfulfilled at their current firm shouldn’t use the current climate as an excuse to let fear stop them from doing what they believe is ultimately right.

Similarly, advisors shouldn’t let a temperamental stock market be the sole determinant for jumping to another firm. For example, in the worst days of 2008 and 2009 many advisors who watched their assets under management become eviscerated over a matter of weeks – while their personal portfolios plummeted – made the decision to change firms simply to take advantage of high water transition deals; a wealth replacement strategy, of sorts. The upshot: many advisors moved for the wrong reasons, letting fear be their guide, and later found themselves unhappy because they made a knee jerk decision.

The best advice we can give to advisors who are planning to change jerseys during this or any other turbulent time: First, take a deep breath. Don’t feel as if you are held hostage by market conditions. Trust your instincts and make the decision to stay or go based on what’s right for you and your clients in the long term.

And most of all: don’t let fear overtake you and become the governor of your future.

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