Latest / Retire and Thrive / When the Market Drops, Don’t Panic. Follow the Plan

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When the Market Drops, Don’t Panic. Follow the Plan · Retire and Thrive

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  Welcome back to another edition of Retire and Thrive, where we
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  help you build your life with purpose, wealth, and confidence.
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  I'm Cammy alongside Dan. Thanks so much for joining us
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  this week. And we are talking this week
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  about your financial plan and how important it is when we look
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  at the market and maybe there's some uncertainty with the
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  market. So Dan, this is something that
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  you focus on quite often, that financial plan and not giving up
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  on it. So when we see market downturns,
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  how should your financial plan play a role in this?
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  Well, I think the financial plan, the way I look at things,
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  Cammy, is the financial plan is kind of like the blueprint,
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  right? So like if you're building a
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  house, that's the actual blueprint and you just stick to
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  the plan. And I know we talk about this
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  often. It depends on what age you are
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  and what stage of life that you were in.
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  And I, I, I feel like I continuously refer to a
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  financial plan. And the reason why I, I, I refer
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  to it is because of that is the foundation that is the base,
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  that's where everything starts from and it's the investments
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  that feed into that plan. And so during market
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  uncertainty, volatility that we've seen, you know, we've,
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  we've seen it not just this year, but I think back in the,
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  in the first quarter of 2025. And again, I'm taking you back
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  memory lane a year ago, but this whole tariff things sent
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  everything, you know, all of the uncertainties and the markets
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  dropped. I think the S&P was down from
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  from the month of March to April was down over 15%.
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  I mean, it was a little bit scary and again, it was unknown,
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  right? But the financial plan didn't
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  change. So a little education for folks
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  at home and myself included. A question for you.
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  When we look back to when those tariffs were announced, there
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  was uncertainty. We didn't really know how it was
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  going to play out. So who controls the market?
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  How is that determined and how is our money impacted by that?
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  So who controls the market? I think I know the answer to
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  this, but do you have a four O 1K?
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  Yeah. So you control the market, Noah
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  controls the market, I control the market.
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  It's everyone that's contributing to the market.
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  So I'm, I'm giving you kind of a general maybe poking a little
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  bit here, but who controls the market?
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  It's the investors, it's the people that are contributing to
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  the retirement plans, and it's to the people that have
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  retirement plans that they're drawn income off of.
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  But the short answer is the reality of what moves markets up
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  and down in the long term. When I say long term, I'm
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  talking 234 years. It's usually how is the economy
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  doing? Well, we hear this word economy.
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  What's what's an economy? Well, are companies making more
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  money? Are they making less money?
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  Are consumers saving more money or they spending more money?
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  Is the debt for consumers going up or is it going down?
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  So that those are some of the economic things that we look at.
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  And if all of those are healthy and they look like they're going
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  to be healthy down the road, then generally the markets will
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  act positive. But when we look back to like
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  3-4 weeks ago when, you know, the US invaded Iran, I mean,
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  that's uncertainty. So a lot of people make
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  decisions, Cammy, based on emotions and what they think.
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  And I know I shared this with the audience last episode.
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  The markets do not like uncertainty, nor do investors.
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  They don't like that cloud of unknown of what's going to
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  happen and could this be the next thing.
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  And so I, I feel like over the long periods of time, it's how
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  the economy grows. And in my 35 year career,
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  there's never been a time where the market went down and
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  eventually it didn't come back, not only to where it was at the
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  beginning of the downturn, but to exceed new highs.
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  Sure. Back to the financial plan
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  topic, do you have advice for folks?
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  You're going to say it's never too early, but when should folks
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  start planning for their future and creating that financial
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  plan? Yeah.
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  That, no, that, that that's, that's a very fair question.
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  I don't think there's anything wrong with when to start a
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  financial plan because I don't think people in their 20s need a
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  financial plan, quite frankly. I mean, again, just being
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  completely transparent, if you hire a financial advisor and
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  they put together a robust financial plan, it is not free.
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  I mean somehow they will get paid.
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  And so there are times where we will have people come to us that
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  maybe were referred to us and they might be in their mid 30s
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  and we'll sit down with them for an hour and we will say here's
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  our suggestion. You are in the accumulation
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  phase and you should not be paying people like us when you
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  get closer to retirement and you're in that distribution
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  phase and determining when should I take Social Security?
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  Should I take my pension as a monthly income or as a lump sum?
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  You know, all of these other uncertainties, Should I be
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  pulling money out of my Iras versus my Roth?
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  I mean, all of those things. That's when you need a financial
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  advisor in your earlier years during the accumulation phase.
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  If you can find an advisor that can at least steer you in the
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  right direction. Some of the questions really
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  are, should I put money pre tax in my 401K or should I put it in
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  the Roth? What's the implications of that?
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  So I, I think to answer your question, is there a, is there a
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  specific age? I think it depends on the
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  financial situation. I mean, we do have clients that
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  are in their late 20s, early 30s and some of it is maybe they're
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  self-employed or maybe they've got, you know, high income and
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  so they need help with tax scenarios.
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  So I don't like to use the word it depends.
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  But in this case it does depend. But for the most part, I would
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  say once you start accumulating some money and you're into your
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  40s, I would at least start to to to explore hiring and
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  financial. OK, so my assumption was a bit
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  wrong you it could be a bit too early to start that plan.
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  I mean, obviously it's important to be savvy when it comes to
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  your finances, but. Can I interrupt your own minute?
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  And I feel like I might have not been clear enough, but for
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  somebody like you in your 30s, there's nothing wrong with
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  hiring a financial advisor who can put together a financial
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  plan and not just sell you a product.
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  But I do think it's important that people in their 30s and 20s
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  for that matter, to understand the impact of compound interest.
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  In other words, starting earlier in the difference.
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  And if you get that and you're comfortable with deciding how
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  much I should put into my IRA pre tax or MY4O1K pre tax versus
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  Roth, then that's probably not a time where you should be
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  spending fees to an advisor. Sure, sure.
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  All right, All right. Some good advice there.
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  Back to when the markets drop potentially, how important is
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  diversification when it comes to our money?
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  I think it's very, very important.
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  And interestingly, interestingly enough, it's not just when the
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  market drops. I mean, there's major, major
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  Fortune 500 companies in the markets are going up and up and
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  up and they stumble like maybe they have a bad year and their
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  stock goes into a free for all. And so when we see those type of
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  things, that's when diversification is really
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  critical. So the volatility that we've saw
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  as of late, having a diversified portfolio is very important
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  because you may have some stocks, you may have some bonds,
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  you may have some investments internationally, you may have
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  some of the money market account.
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  And, and, and the whole concept of diversification, and this was
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  taught by, you know, me at a very young age, in my teenage
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  years by my late father is, and you've heard the phrase before,
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  don't put all your eggs in one basket.
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  And there's true and you know, for those of you that don't
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  understand that it's don't put all your eggs in one basket
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  because if you drop the basket, they're all going to break,
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  right. And so it's kind of a similar
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  concept. Don't put all of your
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  investments in the same type of an investment.
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  So yes, diversification is very important.
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  And and that I just want to say that and that diversification
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  matters based on the stage of life that you are in because
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  your diversified portfolio at your age is going to look
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  different than somebody that's maybe approaching retirement.
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  Speaking of someone possibly approaching retirement, what
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  happens when they maybe did put all their eggs in one basket?
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  What advice do you have for them?
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  Is it too late to diversify? Never too late to diversify.
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  Ever. We have kind of a weird, funny
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  phrase here, and there is some truth to this, and this is
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  certainly not advice I'm going to give, but concentration
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  builds wealth. Diversification protects wealth.
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  So we work with some corporate executives that may have 50,
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  seventy, 80% of their money tied up in company stock.
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  And if the company stock, if they were fortunate, the company
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  stock did really, really well. It worked to their advantage.
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  And then it's time to diversify. But for other people we've
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  worked with where they might have a high concentration, the
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  company's stock and the company stumbled, you know, you know it,
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  it varies, you know, how fast the company comes back.
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  But yeah, diversification is very, very critical.
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  Can you remind us once again why it is so important to review
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  your portfolio regularly? The simple answer is things
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  change. You know, things change with the
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  economy, things change with the markets, things change with
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  asset classes. But more importantly, Cammy,
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  things change with you. Things change with me.
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  I mean, look at you. I mean you're the whole life has
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  changed a month ago, 5 weeks ago it's changed.
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  So you should be reviewing your financial plan.
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  I mean, you should be looking at college funds if you and your
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  husband are, if that's important to you too.
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  If it's not, then don't look at it.
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  But if it's important, you should be looking at 529 plans.
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  So why is it important to review?
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  Because your life changes, and so does the markets.
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  Any other advice you have for folks when we are dealing with
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  some of those downturns when it comes to the market?
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  Yeah, I did say it last episode and I'll, I'll put a little bit
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  different spin on it this time that continue to focus on what's
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  important to you and that specifically is going to center
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  around your lifestyle. Don't play the game of keeping
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  up with the Joneses. In other words, you know, we
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  look at things, I don't want to go too granular here on UCAMI,
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  but we look at things more from what we call a strategic
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  allocation. Strategic allocation is in your
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  30s, you're going to have a high percentage of your money in the
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  stock market. But when you're in your 60s,
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  you're going to have a lower percentage of your money in the
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  stock market. So somebody in their 30s might
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  have 80% stocks, 20% bonds and cash.
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  Somebody that's 60 might have 60% bonds and 40%, you know,
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  stocks and so forth. And so, and inside of that
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  strategic allocation, we have something called a tactical
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  allocation. And the tactical allocation is
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  do we want short term bonds? Do we want long term bonds?
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  Do we want large cap? Do we want small cap?
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  Do we want growth? We want value, all of that, that
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  tactical side. That's more of the how do I say
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  it? That's more of the Country Club
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  talk. It's kind of the sitting around
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  the table talking to your buddies and saying, hey, yeah,
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  you know, I went into some high yield investments or I'm going
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  into small caps because it's kind of it's it's the sizzle of
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  the steak, if you will. And my message is, stay
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  diversified, stay to your plan. Don't get caught up of what
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  really is trendy. What's the hot thing?
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  Because as corny as it sounds, sometimes and almost all the
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  time, the tortoise wins the race.
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  Stick to the plan. Sure, sure, slow and steady wins
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  the race. We touched on this often.
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  But how important is a financial advisor for folks?
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  People might be standoffish with that because they just think all
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  that's an added expense. But I imagine that it can help
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  save money and actually help you, you know, spend your money
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  appropriately or at least invest your money appropriately.
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  Why is that so important for folks, especially when they
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  reach that retirement age? Yeah, I, I think I want to come
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  at this as unbiased as possible. And I'm, I'm going to speak
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  truly from an unbiased perspective as we've talked
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  about from tons and tons and tons of episodes, you and I wish
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  that you and I have shot. We do financial plans first.
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  We're a planning centric firm. We don't even talk about
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  investments. We focus on the plan itself 1st.
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  And so the financial plan itself is, is very, very important.
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  And the people that come to us that are approaching retirement,
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  the majority of them have no idea when they can retire, what
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  retirement looks like, when to make some of these decisions as
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  it pertains to Social Security or Medicare.
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  And we're not perfect. I think we really, really try.
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  We, you know, our students of the business, we're always
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  trying to refine our skills, get the latest and greatest software
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  and technology. But I think an advisor has many
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  aspects that a non advisor do it yourself or wouldn't have.
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  Some are the bigger decisions that that I had just mentioned.
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  As you're approaching retirement, I think it's even
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  more critical, but also something that isn't talked a
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  lot about and that is called behavioral finance.
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  Behavioral finance is not making decisions based on emotion.
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  And there's been many studies by the big firms, be it Vanguard or
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  Fidelity, that when you do things alone without a financial
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  advisor, historically, on average, not everybody, but on
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  average, your rate of return is less because you make decisions
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  on your portfolio. Like we talked about last
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  episode, trying to time this thing, getting nervous, getting
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  out of the market and so forth. And sometimes having an advisor
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  theoretically hold your hand and say it's gonna be OK, right,
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  might be worth it. And I just, I would just
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  encourage the audience to maybe do a little bit of a mind shift
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  and say, it's not so much how much is it gonna cost me?
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  But is the fee worth is, is that fee, IE the investment worth
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  what I'm going to get out of it? And oftentimes it's hard because
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  these people have worked their entire life to build up as their
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  butcher retirement, their nest egg and they're turning it over
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  to in essence, a stranger. And you know, for us, we're a
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  fee only, which means we don't charge any commissions.
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  We don't do any upfront fees any of that.
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  I do, you know, for newer people, you know, if, if I sense
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  that they're nervous about that, I said, well, here's the thing,
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  you can always test drive us because there is no upfront
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  fees. And if you're not happy or you
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  don't like the service or you don't like the deliverable, you
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  can go back to what you were doing.
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  And so, yes, it is an investment, but the value has to
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  exceed whatever that investment. Is you touched on that emotion?
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  Is it typically fear, being scared about what's going to
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  happen? Probably and part of it's
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  unknown and, and, and we recognize that and, and you
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  know, I am in my late 50s, so I get it.
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  But our team here is younger in general.
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  And so you take someone who's been working at an employer for
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  40 years and they built up this in large 4-O1K or 4-O3B and
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  they're going to turn it all over to some kid who's 35 years
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  old. I mean, I get it.
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  And so I think sometimes that unknown, that uncertainty is
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  scary. Yeah, yeah, for sure.
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  But as you mentioned, you can always test drive and see if you
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  like it, see if it works for you.
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  Lastly, what gives retirees the most Peace of Mind that you've
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  noticed when we deal with uncertain markets?
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  I think the biggest Peace of Mind retirees have is knowing
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  that they're going to be OK during these uncertain times.
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  And again, I don't want to keep saying this, but without a
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  financial plan, you don't know. And, and people don't know, they
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  can have $1,000,000 portfolio and it can drop 10% to 900,000.
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  That's real money. And what often times resonates
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  with people is they're like, do you realize how long it took me
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  to accumulate 100 grand? And literally in six months it's
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  gone. That's scary to people.
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  But if we have a financial plan that has that built in, here's
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  what your portfolio will do if the market drops by 10%.
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  Here's what will happen if inflation is at 6%.
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  And so we can weather those storms better if they can
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  visually see in their plan that we built in some of these
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  uncertainties. Good advice.
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  Anything more that you'd like to touch on?
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  I don't think so. That was enough.
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  Yeah, I think we've covered it. Thanks so much for joining us
• 15:48
  this week. You can follow along.
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• 16:02
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