A wide majority of pension fund managers are warning that investors could be in for a bumpy ride this year. Roughly 8 in 10 fund managers said that they expect an elevated risk profile in 2025, according to a new
Fund managers surveyed said that their concerns around asset liabilities are driven by market volatility, regulation and inflation. But market conditions aren't the only cause for concern, the managers said.
Financial advisors say those same risks are being felt in their one-on-one planning. Nearly a third of advisors said they expect their clients' risk tolerance to decrease over the next three months, according to data from the February
Managing client fears in an uncertain market
With the new Trump administration, there's a lot of uncertainty and
One of Nangle's clients, concerned that she was going to lose everything in the market, recently asked if she could put her money in a "virtual mattress," Nangle said. Helping clients concerned about market conditions can involve making adjustments to their asset allocations, Nangle said, but the first step is always having a simple conversation.
"For the most part, it's [about] listening to them and then figuring out what's going to make them feel comfortable," Nangle said. "Sometimes it's, you know, creating a bigger cash cushion so it eliminates that short-term worry. Most of the time, we end up
Other advisors share Nangle's approach.
"Anytime I do talk with a client about their concerns with volatility or inflation, I emphasize the importance of having a structured financial plan that can account for different market conditions rather than having a need to react to short-term headlines," said Ben Loughery, founder of Lock Wealth Management in Atlanta.
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After seeing 20%-plus returns over recent years, it's natural to anticipate a potential pullback at some point, Loughery said. "There are always risks in the market, but history shows that staying invested for the long term has consistently rewarded investors," he said.
At this moment, a growing share of financial advisors say they're working to remind their clients of that bigger picture.
A Main Street disconnect
Financial advisors are likely to hear a much different sentiment from their clients than they would on Wall Street right now. The American Association of Individual Investors'
In contrast, Citigroup's Levkovich index, a composite of indicators like margin debt levels and the put/call ratio, which measures investor sentiment from "panic" to "euphoria," dipped slightly last week but remains in the euphoria zone.
When clients come to Nangle with concerns about the market, she's focused on providing them one thing: peace of mind. Sometimes, as was the case for a couple of her clients during the 2020 stock market crash, achieving peace of mind means making short-term adjustments to their plans. But for most of her clients, Nangle said that maintaining comfort in an uncertain market comes down to simple cash flow.
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"A lot of it comes down to planning for near-term cash flow, so if we do have a downturn, we're not suddenly looking at having to sell out in a down market," she said. "That's been pretty successful. Doesn't stop the market downturns, but it just creates some peace of mind."
Carlos Salmon, a financial advisor at Wooster Square Advisors in New Haven, Connecticut, said he is taking a similar approach to addressing client concerns right now. Maintaining strong positive cash flow is one of the most important things people need to be doing in the current environment, Salmon said.
"We've had a couple of down days in the market, so I think people are going to probably have a little bit of discomfort," Nangle said. "And that's where we reach out to our clients and earn our money, understanding what we need to do to make them feel comfortable."
