Financial advisors often promote their services by saying that they can help remove emotions from investing. In theory, advisors can use a variety of risk management tools, knowledge of capital markets, and long-term investing perspectives to help their clients avoid making costly knee jerk reactions.

Brexit is just one example, but it can be a powerful case study for advisors seeking to help clients understand why emotions should be curtailed by financial professionals who are armed with capital markets expertise.

In the months leading up to the Brexit referendum, markets climbed and declined in response to changing expectations for how the country’s citizens would vote. In the final days before the vote, investor sentiment strengthened as pundits increasingly said a vote in favor of the U.K. pulling out of the European Union was unlikely.

Many investors had previously feared that Brexit would hinder economic growth in Europe and create a challenging environment for U.S. companies and business in other countries that sell products in the continent.

Indeed, Brexit is likely to mean that U.K. will have to forge new trade agreements with individual members of the European Union and is likely to have to do the same with U.S. exporters.

When the Brexit referendum surprisingly determined that voters want to leave the U.K., panic ensured. On June 24, when the results were released, U.S. equities dropped approximately 3%. It was the worst single-day decline for the S&P 500 in nearly a year and wiped away the index’s gain for 2016, according CNBC.

By the end of June 27, the index had dropped 4.07%. The decline, however, was only temporary. Indeed, during the last three days of June, the S&P climbed 4.95% and, as of July 8, had generated a total return of 4.21% year-to-date.

Investors who panicked by selling in the days immediately after Brexit are likely to have sold during a dip, only to miss the strong returns when equities bounced back. With that in mind, advisors should explain to their clients that panic selling often results in selling low and then missing out on the strong returns that typically follow market dips.

They should explain, furthermore, that using portfolio diversification to cushion declines, maintaining a long-term perspective, and understanding the role of corporate fundamentals can go a long way in helping investors avoid panic selling.

Advisors should develop illustrations that show how having a mix of asset classes could have reduced the impact upon a portfolio of the post-Brexit market decline and that portfolio rebalancing may have resulted in buying equities during the market dip.

They should also show index performance numbers that illustrate how riding out historical market declines, including the correction associated with the Great Recession, would have allowed investors to recoup losses and then eventually achieve additional gains.

Finally, advisors should point out that corporate fundamentals don’t justify a major prolonged market correction. While overall corporate earnings in the U.S. have taken a hit due to cheap oil, many industries, such as Information Technology, are experiencing strong sales and improving profits.

Innovation, meanwhile, is allowing companies like Amazon.com and Netflix to rapidly grow their earnings by disrupting traditional business models with technology. At the same time, corporations are holding near record levels of cash, which is allowing them to buy back stock, launch dividends, and conduct mergers and acquisitions at near record levels.

All of those actions provide additional support to stock prices. The U.S. economy is also likely to support corporate fundamentals. While U.S. economic growth has been slow, many developments are encouraging, with the labor market strengthening, real estate values increasing, and consumers’ finances improving.

Collecting Social Security early can help retirees assess how much they can spend because the payments are consistent. So reports Wealth Management.

Also, proponents of waiting typically point to the 8% payment increase you get for delaying the payments. However, the nominal annualized reture when waiting a year is less than 8% and retirees will miss out on a full year of payments. 

Lastly, collecting Social Security may be more attractive than withdrawing money from an IRA when considering taxes.

Read the full article from Wealth Management.

The Securities and Exchange Commission recently awarded a whistleblower $3 million for information that helped the regulator crack a complex case of fraud. So reports ThinkAdvisor. The program was established more than three years ago and has paid out more than $50 million to whistleblowers.

Read the full article from Think Advisor.

Robert Renshaw has joined Edison, N.J.-based Fountainhead Capital Management as senior financial strategist. So reports TapintoEdison.

Fountainhead Managing Partner Marc Rock says Renshaw’s strength involves understanding each client’s unique circumstances and partnering with the appropriate team members to create customized strategies.

Read the full release from TapintoEdison.

The financial markets are upended again for the second time in the last 12 years, although the underlying reasons for the volatility are quite different. 

A recent article from CNBC outlined three major differences between then and now and what those differences mean for financial advisors moving forward. 

1 – Banks to Blame

During the Great Recession, the banks were largely to blame. The banks approved mortgages for subprime borrowers in unprecedented numbers, inflated their profits, minimized their risk and ultimately created a housing market bubble that burst. This time around, the market volatility is largely due to uncertainty created because of the virus’ impact. Even though Jerome Powell, chairman of the Federal Reserve, said the economy could contract by as much as 30% during the second quarter, banks are better equipped to weather this storm. For comparison, the biggest quarterly drop during the Great Recession was 8.4%.

2 – Quick Draw

During the Great Recession, Lehman Brothers was allowed to collapse. The Bush and Obama administrations took action—by providing liquidity through TARP and offering fiscal stimulus to the tune of $941 billion.

In the current crisis, the Federal government acted much quicker. The Federal Reserve cut the federal funds rate to almost zero, and kicked off a corporate bond buying program. The Federal government also passed numerous relief and stimulus packages, including a $2 trillion stimulus package in March alone, the month the outbreak exploded in the U.S.

3 – Market Freefall

During the Great Recession, the major stock indexes fell 50% over an 18 month period, which caused many investors to ditch the markets and ultimately miss out on the rebound.

The market freefall during this crisis was much more swift, leaving many investors shellshocked into inaction. For example, the S&P 500 dropped by 34% between Feb. 19 and March 23, the quickest descent into a bear market in history.

Read the full article from CNBC.

Despite wild volatility for weeks, the majority of financial advisors expect it to still get worse before it gets better. So reports CNBC.

An overwhelming 81% of advisors polled by Ned Davis Research say they think we have yet to hit bottom. They expect the S&P to continue to fall below its March 23rd levels. At that point, the S&P was down 34% from its Feb. 19 high mark.

Meanwhile, more than half expect the market to bottom out by the end of May, while one in four think it will occur later.

Read the full article from CNBC.

Many advisors have seen crisis before, including Black Monday and the Great Recession, but the coronavirus global pandemic is uncharted territory. So reports Bloomberg.

Not all clients have the same goals. Here are some of the biggest questions FAs are getting and a sampling of how they’re handling them

Is it time to buy?

Susan Kaplan, an RIA in Newton, Mass., says she’s been “holding people back” because she foresees more volatility until the outbreak is over. She caters to clients with net worths of $10-$12 million

‘Is it time to sell?’

Leon LaBrecque, chief growth officer at Sequoia Financial Group, says half of his calls are about buying opportunities, while the other half are from concerned clients. He says the concerns are financial, but also about the virus and how it impacts his clients' careers and their lives in general. His advice about their accounts: sit tight, for now.

‘Should I be scared?’

Steve Morton, of Captrust Financial Advisors, says his clients “set aside five years of money for income” and use the rest of their money to invest in actively managed stock and bond. This approach provides them with income for the next half decade. “Certainly within five years we’re going to come up with a vaccine for this. That calms them down," he told Bloomberg.

Read the full article from Bloomberg.

Recent market volatility is drawing an awful lot of comparisons to the Great Recession. But, according to a recent USA Today article, the damage caused by the coronavirus won't likely be as deep or long-lasting as in 2007-08.

Gus Faucher, chief economist of PNC Financial Services Group, said a recession is not inevitable and that if there is one it is “likely to be brief and much less severe than the Great Recession."

One of the reasons for the difference is because the 2008 crisis was caused by significant underlying issues in the economy. The coronavirus outbreak, on the other hand, is an outside event that’s prompting the volatility. Some compare it to a “natural disaster.”

Once the outbreak is over, the economy’s major players should be poised for a comeback, according to the article.

For a deeper comparison between today and 2008, click here to read the full article from USA Today.

David Arthur Wismer III, a former LPL Financial advisor who was on probation after a 2018 conviction of sexual assault on a child by one in a position of power, is heading to jail for contacting the victim repeatedly. So reports Financial Planning.

Wismer, 55 and a registered sex offender, was sentenced on May 18 after speaking to the victim more than 100 times over the phone during a ten month span. The victim, who was a teenager at the time of the sexual assault, is now 20.

Read the full article from Financial Planning.

Goldman Sachs has delayed its plans to expand its wealth management services. So reports Advisor Hub. 

In January, the firm had said it planned to hire 250 advisors globally over the next few years to serve ultra-wealthy clients. It also said it would continue to expand to continue to serve middle class and young investors.

“While we continue to pursue growth in our overall wealth franchise, we are acting prudently in the current environment,” says John Waldron, Chief Operating Officer, according to Advisor Hub. “We have decided to slow our advisor hiring activities this year… and we will defer the launch of our digital wealth offering into 2021.”

Waldron made his comments at a virtual conference for investors.

Read the full article from Advisor Hub.

Twenty-eight percent of respondents to a Northwestern Mutual’s Planning & Progress Study said they most trust themselves for financial advice, versus just 24% who said they most trust a financial advisor. So reports Financial Advisor Magazine.

Meanwhile, just 13% said they most trust a family member. For the study, the Harris Poll surveyed 2,650 Americans of at least 18 years old in February.

Other survey highlights include:

• 71% said their financial planning needs improvement
• 65% don’t work with a FA
• 15% don’t receive financial advice from anyone

Read the full article from Financial Planning Magazine. 

Some investment advisors are rushing to return money taken under the government's Paycheck Protection Program (PPP), while others are keeping mum on whether they took the loans in the first place. So reports NBC News.

The emergency program was passed to help small businesses cope with the economic impact of the COVID-19 pandemic. Many firms took the loans and advised clients to do so as well in pursuit of “newly available government laws, regulations and tax codes to their best financial advantage,” and not due to economic distress. However, following revelations of several wealthy institutions and firms taking funds from the program, public outrage, and new guidance from the SEC and Small Business Administration, some are returning the money.

One top firm—Moneta Group—said it took a PPP loan to protect itself “from having to furlough people at a time when our clients need us most,” according to the article from NBC News. In late April, the firm, which has 300 employees, said it wasn’t considering layoffs.

Moneta, which primarily serves high-net-worth individuals and handles $24 billion in investments, recently told NBC News it was no longer taking the funds in order "to ensure they reach the hands of other businesses in more need."

Moneta is not alone. Manning & Napier disclosed in an SEC filing it applied for a PPP loan in April to help cover payroll and rent, but later noted it rescinded its application following the guidance from SBA.

These examples, among others, are part of a larger debate about whether firms who technically followed the letter of the law, but maybe not the intent, should face punishment. NBC News said that some of the financial advisors barely impacted by the outbreak decided to apply for the PPP loans because of guidance received from their tax attorneys, business managers and advisers, according to sources.

Read the full article from NBC News.

The pandemic is taking a terrible toll on many Americans’ health and finances. At the same time, financial crisis can be a real opportunity for advisors to demonstrate value to clients and grow their businesses. That’s according to Timothy D. Welsh, CFP is president, CEO and founder of Nexus Strategy, LLC, who authored an article for Think Advisor. 

Crises create money in motion—investors looking to possibly leave their current advisor because they’ dissatisfied and newcomers seeking financial advice for the first time. In fact, a recent study, according to the article, finds that the pandemic has caused one out of every four investors to work with an advisor for the first time. For newcomers, a market crisis often exposes that they have taken on too much risk. 

To help attract and keep these newbies, advisors can think about simple content strategy, which can include very basic videos, to communicate with investors about a number of topics, such as rebalancing a portfolio, managing risk, etc. But, its important for advisors to be helpful, and not overly self-promotional—a soft pitch, not a hard sell. Remember, many of your potential clients are scared or in crisis themselves, and a personal touch can go a long way.

The second group of investors in play is those unhappy with their current advisor. The main reason clients fire their advisor is a failure to communicate. It is the top driver of dissatisfaction in good times and bad. 

The easiest way to find unhappy investors is to simply ask your friend, family, and broader network. It could lead to millions of new dollars for your firm. 

Taking a proactive approach with current clients can also have an impact on attracting new clients. “Leading advisors are adding value through rebalancing portfolios, tax loss harvesting, providing updates to financial plans, re-taking risk tolerance profile assessments, recommending re-financing to take advantage of historic low mortgage rates, moving client’s idle cash to higher yielding products instead of letting custodian bank sweeps return scraps, and more,” Welsh writes for Think Advisor. “These visible, pro-active steps show to clients that you are there for them, adding value and earning your advisory fees.”

Welsh says now is not the time to retreat or cut staff. Now it the time to seize the opportunity created by crisis—to serve current clients well and help new ones.

Read the full article from Think Advisor.

Amid panic and fear about the coronavirus pandemic and the correlated market fallout, advisors need to be the calm in the storm for their clients. That’s according to retirement experts interviewed by ThinkAdvisor.

Advisors need to communicate clearly to clients, noting that in most cases, the most prudent approach for investors is to simply stay the course when it comes to their retirement portfolios. They should talk to individuals about their goals and how those goals haven’t changed just because of the current crisis. And, remember, that clients are often emotional, worried about more than just their finances.

Some advisors have shown clients their performance over the last year, which they say, shows gains in most cases. When shown they still made money, despite all the doom and gloom, they become less stressed.

Cerulli Associates, for its part, says that when looking at the 2008 financial crisis, advisors who proactively reached out to clients were able to retain clients and even gain new ones.

Read the full article from ThinkAdvisor.

Artificial Intelligence, or AI, is not the enemy many financial advisors fear it is, according to Jack Brod, chair of the CFP Board of Directors. So reports Financial Advisor.

Rather than worrying they will be replaced by robo-advisors, or other forms of AI, financial advisors should be embracing it and incorporating it into their practice. It has the potential to handle much of the manual labor that financial advisors have to do.

“The introduction of AI in all industries, including financial services, is not something that is happening overnight,” Brod said, according to the publication. “It is evolutionary and is happening by degrees. Advisors will have time to understand and adapt to the new ways.”

Read the full article from Financial Advisor.

John Anderson, Managing Director of the Practice Management Solutions Team for Independent Advisor Solutions by SEI, said recently that in order to succeed in the next 5-10 years, advisors are going to have to find a niche rather than operate as generalists. So reports CNBC.

It will become increasingly difficult for lifestyle-type firms—or those with ten or fewer employers and managed by the founder—to compete with the large advisor firms or cheaper digital advisors. They will also face challenges associated with the ending of the longest economic expansion in history, and the transition of Baby Boomers from the accumulation phase to decumulation.

However, firms that develop a niche, like catering to the needs of millennial clients or widows, can distinguish themselves. Yet, many aren’t planning that far ahead.

Read the full article from CNBC.