The Threat of a Recession Has Subsided. Are Your Clients Prepared for the Next One?
By Danielle Labotka, Behavioural Scientist
There’s a saying in theater: “Bad dress rehearsal, good opening night.”
In many ways, we just had a dress rehearsal for a recession.
Though investor sentiment has since turned around, new research from Morningstar found that investors came into the year expecting a recession and, in many cases, were already preparing for it—and not always in a smart way.
But now that the imminent threat of a recession has subsided, it’s a good chance for advisers to learn from what investors did when they were worried. By getting familiar with what these decisions looked like, advisers can work better with clients to achieve their investing goals amid inevitable market downturns. After all, opening night is only better than the dress rehearsal if the actors have learned from it.
The results of the study suggest there are two major things advisers can do now: 1) play catch-up and 2) get ready to go on the offensive.
Catch Up on Clients’ Financial Actions
In the face of a recessionary threat, 87% of investors took at least one action to prepare for a recession. For about half of all investors, that included touching their investments.
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