Springfield Business Journal_2020-09-28

12 · SBJ.NET SEPT. 28-OCT. 4, 2020 Springfield Business Journal Features Editor Christine Temple discusses financial planning with Paula Dougherty, private wealth adviser with Ameriprise Financial Services Inc.; Kenny Gott, president of Piatchek & Associ- ates; Diane Homan, executive vice president and Springfield market executive of Central Trust Co.; and Jack Thurman, partner at BKD Wealth Advisors LLC. Christine Temple: What is the one word to describe your industry in 2019, and then another word for 2020? Paula Dougherty: For 2019, unprecedent- ed. In 2020: pivotal. Diane Homan: For 2019, robust, and for 2020, cautious. Kenny Gott: For 2019, I’d say exuberant. It was a big market year. And 2020 I’d say surprised, by the pandemic, but also by stock markets so quickly getting back into positive territory. Jack Thurman: This may sound a little bit negative, but clueless. We had no idea what was in front of us in 2019. Yet 2020, a much more positive word is resilient. Pandemic planning Temple: Talk about COVID-19’s impact on financial planning. Dougherty: Every company is unique but faces the same concerns, such as return- ing to work versus now, are they going to work permanently at home? How are they going to protect employees? How are they going to protect customers? How are we going to communicate going forward? I personally had never heard of Zoom before February. Now it’s become a way of life. Homan: We are a client relationship busi- ness. When that suddenly stops and you can’t have your face-to-face meetings, you don’t have employees in the office, you have to resort to the tools that you have. We try to continue to have as many meetings as we can. We’ve had to cancel client events, which is difficult. We are continuing our plans that we had for 2020, we’re continuing our system upgrades; that’s even proven to be more essential than we thought it would be now that we have to rely on technology more and more. Gott: For financial planning for individuals and families, it depends on where they sit. For those who are retired on a fixed income from Social Security or pension, supplementing that with reasonable distributions from investment accounts, some need a little reassurance that their long-term plan is still working. If they were nervous before, they’re more ner- vous now. We always say it’s better late than never to get started on that plan and get a retirement analysis from a pro- fessional. Maybe you’re better off than you think, and if you’re not you need to know it so you can make adjustments. People who are in the workforce who are worried about their jobs are putting their budgets where they can just like businesses: holding off on discretionary spending, socking away the stimulus checks. Nobody’s taking anything for granted in this economy. Homan: For individuals, what we are see- ing, as well, they are revisiting their plan more frequently while they may have revisited their plan every two years. They don’t know what to expect in the future and they want it to be as realis- tic as possible. That’s just come to the forefront of their mind. Let’s look at it. I’m going to give you more detail than I ever have before. Thurman: I’d go ditto. That would be exactly where our clients are. Just give me more rational, more detail and more realistic. Homan: Our wants and are needs are changing, as well. What is the differ- ence between my wants and my needs? Maybe I don’t have to put all of my wants in my plan. Maybe that’s not going to be realistic. Temple: And that goes to the cautious that you said at the beginning. Are people changing their investment portfolios? Homan: Surprisingly for our clients, we have had little change in their asset allo- cation. For the most part, people stay the course, and that comes from education from the last 10 years. That’s hard some- times when the market’s going great and they’re making 10%, 20% on their equity portfolio over time. But we say, “OK, re- member 2008, how are you going to feel if your portfolio goes down 30%?” We just have to rein them in sometimes. Thurman: If we didn’t start educating our clients … after 2008, 2009, you’re going to have clients that are just going to go nuts in the early stages of the pandemic. (We spent) time educating … on what we call the five Ps: prior preparation prevents poor performance. When they did have the plan and they had the education, they were like, “OK, I don’t like what’s going on in March and April of this year,” but they were a lot more resilient and tolerable because they said, “You know what, we’ve already been through this.” People that didn’t have plans got crazy. But we only had two or three – over a thousand clients – that went 100% cash in the midst of this. Temple: Kenny, you mentioned that the stock market bounced back rather quickly. Was that what you anticipated? Gott: Stock markets always come back, and that’s the drum we always pound with clients. The average downturn, since the Great Depression through 2008 … took a little over three years for stocks to drop, hit bottom and come back all the way up to what they were worth before. We pound this drum continually with clients between reces- sions, and we have a plan so that they know what to do and what we’re going to do with their distributions. If they’re taking money out of their accounts each month, for example, which is pretty common, how are we going to manage that through a downturn? It’s the one thing that people really mess themselves up on. Dougherty: We started talking to our clients toward the end of last year about what an unprecedented year it was, but then don’t expect a repeat of this. We’re heading into an election year and there’s going to be some volatility. Then around the spring, we all know what happened. I had a client say, “Well, you said this was going to happen.” And I said, “Oh, not for this reason I didn’t.” We had very few people panic, and they feel confident they’re on track with regard to their situation thanks to the conversations that we all have with our clients. We all realize that we’re part of our client’s team and that a good, solid plan is worthwhile and worth its weight, especially in these fearful times and times of uncertainty. Measuring the economy Temple: We hear this commentary that the market is not the economy. What are the other kinds of economic metrics that you’re looking at? Are you looking at unemployment rates? Thurman: Yes, plus inflation. You have a monetary policy that’s totally unprec- edented. I have an economics degree and there is no way in the world they ever taught us, as much as I love Drury [University] … that you could have a monetary policy like we’ve had, and we would not have inflation of any signifi- cance in the midst of it. So we’re looking at inflation because right now, as we understand it, you could have hyperin- flation or possibility of deflation. Not to say that they’re out of whack yet. Homan: The fundamentals [are] not there to explain what’s happening. We don’t understand what’s going on. When your fundamentals don’t follow what’s hap- pening, you just have to look at all the dimensions out there: unemployment, what’s going on with inflation, interest rates. Sometimes the market doesn’t re- spond how it should in those times and at those levels. Thurman: Fortunately, it didn’t respond the way it should. Homan: That’s right, Jack. Thurman: We’re very blessed right now. I don’t know if it’s President Trump’s positive mental attitude, but we’ve got a “super V” in our recovery. There is no fundamentals that say that we should be having this type of market recovery or economic recovery. Gott: The kind of planning we do is designed to take into account whatever happens in the economy and Con- gress, whatever crazy things they do in Washington with tax policy or anything else. There’s no predicting the markets. There was a big study of … predictions FINANCIAL PLANNING GEOFF PICKLE From top left: Christine Temple, Paula Dougherty, Diane Homan, Kenny Gott and Jack Thurman