Financial Advisors are Investors too

by Kristina on May 19, 2010 · 1 comment

fortune teller cystal ball

Let me tell you that working in the financial services industry does not make it any easier when trying to predict the future market conditions.  I don’t have a crystal ball that magically appears in my office after every fiscal crisis to predict what will happen next. First of all I don’t do that. I work in personal financial planning with clients, not on the trading floor. I may be your personal banker but I am also a client of the bank and a personal investor as well.

During the economic crisis my retirement portfolio hit rock bottom at -23%.  The average (401k) portfolio loss in 2008 has been reported by MSN Money to be -27%. My point is that even I as an employee in the financial sector still took a loss.  I would love to pull a magic wand out of my Gucci bag and magically correct everything that has happened. If I could take it back I would. But I’m sorry…I can’t do that.

The reason that I am not concerned about the loss in my portfolio is that I am only 29 years old and I have at least another 26 years until I retire (wow that is sad and depressing). So far in my investment lifetime I have seen this happen twice, of course the first time was not as severe.  With the aftermath of the millennium scare and the events following September 11 2001 we saw a rapid decline in the market and in 2003 prime rate in the US reached an extreme low of 4% .  However the market recovered and now 6 years later we are witnessing a similar, however more dramatic situation.  I am predicting to see this happen at least another 3 times before I retire.

Of course the way in which my portfolio is invested will be adjusted to become more secure as I approach retirement. Therefore the way that I react to dramatic market changes will be different. I am a relevantly conservative investor and therefore I do not have a 100% growth portfolio. Although typically someone who is my age and who is investing over the long term for retirement should be more growth oriented.

However, I am just not that girl. I am the girl who always has a plan.  I make a list for everything because it helps to calm me down in unknown and scary chaotic situations. I would love to have large growth and high rates of return in my portfolio. But, I am just not willing to take the risk of potentially having large losses in a market downturn. Therefore I settle for moderate gains in a bull market and less than average losses in a bear market. This is a personal choice that investors have to make.

Your investment advisor is there to help you plan and make suggestions. We are not there to make sure you make the largest profit available and then advise you to get out before the crash. We can’t predict those changes. We can help you plan for any potential unseen events but we can’t work magic. Remember that we are investors too.  If you are going through it the odds are that we are going through it too.  The key to a good relationship with your personal banker is open communication. If you are worried, if you have concerns, if you like or don’t like something then tell your personal banker or investment advisor. We are there to help you.

(photo by benleto)

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