Taking Stock of 2020: Reflective Questions for Advisors and Clients

Posted by Dana Funds Investment Team on Dec 10, 2020 4:19:30 PM

If there were ever a year to have a reflective conversation with clients, 2020 is it. From the virus, to market volatility to election uncertainty, the year has been filled with tensions. The end of the year provides a natural opportunity to reflect on those issues and make both a portfolio - and a client relationship - stronger.

If you’re an advisor going through year-end meetings with clients, we wanted to provide a few questions, suggestions and resources that may help your clients reflect on 2020 and stimulate deeper conversations. We know the vast majority of advisors will cover these issues in some shape or fashion, and have the pulse on their own clients more than anyone. But given how unusual 2020 has been, it never hurts to think of new ways to ask reflective questions.

In the spirit of sharing, here are a few items that may help you and your client reflect on a year of upheaval. We hope you find them useful heading into the new year:

 

Market volatility: How did it feel?

We all say that downturns are a part of equity investing, but it’s been a long time since anyone felt it. For new investors or those who built significant wealth after the financial crisis, this is their first taste. Asking clients to rate their feelings on a 1-10 scale when their portfolio (likely) dropped in March and April, or how many times they checked on their portfolio each day or week during that period, provide a glimpse of their comfort level with volatility, and whether their asset allocation is positioned accordingly.

 

Are you wanting to do more with charitable giving?

Many have been affected by the pandemic and the downturn that has followed. Your clients may want to do more to help those who were impacted. A special provision of the CARES Act provides extra incentive to do so, providing a one-time chance to deduct a higher level of charitable donations from taxable income. Many clients may want to take advantage.

 

What if tragedy strikes?

No one wants to think about their declining health or mortality, but in the middle of a pandemic we’ve all probably thought about it. While the conversation is difficult, clients are probably more open to dialogue and ready to take action to make sure their family is taken care of if something happens to them. Advisors can get them prepared.

At the end of the year, it may be a good time to ask your client how financially prepared their family would be if something happened to them. Providing a checklist of needed items – such as a trust or life insurance coverage – may help them give a better self-assessment.

 

How does the budget look?

If a family member has lost a job, or even just an expected bonus, the budget may be tighter. As financial advisors it’s worth asking if the client wants to go over a new budget together. You could also ask clients whether their children need help budgeting. Many younger workers have been laid off, and helping them with a budget is a good way to build a bridge to the next generation and show your client you care about their entire family.

 

How is your family handling political discourse?

Politics are an issue that many investors, and likely advisors, are hesitant to wade into with clients, but this year, political tension is more than just palpable. For many families, it’s a powder keg. At Dana, we don’t have the panacea for mediation, but found this article helpful. It shares tips from a hostage negotiator on resolving conflict, and is helpful not only for political debate, but other sources of tension that may have come up this year.

 

Nothing has been easy, and we still have reasons to be thankful.

2020 has been a difficult year for everyone, and most of us will be pleased to see it in the rearview mirror. While reflecting, it is important to remember that we have much to be thankful for and in many cases expressing gratitude can go a long way. A simple ‘Thank You’ in these discussions should not be forgotten.  We hope these points will provide opportunities to grow from it.

Here’s to hoping for a better 2021!
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The Dana Funds are distributed by Ultimus Fund Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC. and the firms referenced in this blog post.