Forum Partner Chris Lamia was featured in the May 25 Money Managers Special Report of the San Fernando Valley Business Journal.
In the Q&A below, Chris elaborates on his comments from his San Fernando Valley Business Journal interview and shares how he has been helping clients during this market downturn. Chris and his team are based in Thousand Oaks, California.
The Importance of Having a Financial Plan
1—The article suggests that advisors “need discipline and a long-term strategy.” What have you observed about the resilience of investors to follow the same advice?
I think the resilience of investors is greatly enhanced when they work with a disciplined advisor. We are all human. We all have times when our judgement is impaired by our emotions. That is why doctors should not operate on family members, and lawyers should not represent themselves. When you are emotionally involved in a decision, you tend to make poor decisions. Advisors, while caring, can use their emotional detachment to help keep clients from overreacting to current events.
2—In the article, you noted that a prudent action to take now is revisiting your financial plan. What is there to be learned by reviewing your long-term plan now when there is so much uncertainty?
I think that situations like these give you the opportunity to get “back to basics.” Implicit in revisiting your plan is to revisit what is and what is not important to you. Periods of extreme stress can bring clarity. Frankly, things you may have thought were important before may not be now — and that could be the impetus to modify your plan. The opposite may be true as well. Current events may make you feel even more certain about wanting to achieve things already in your plan. In fact, it may even move the time frame up from “someday” to “within the next few years,” and the plan should adjust accordingly. Nirav Batavia, one of my partners at Forum, recently wrote an excellent piece reiterating the importance of re-evaluating your financial plan after a market downturn.
3—How has this market downturn differed from other financial crises?
I think the extreme volatility over such a condensed period of time is what has made this downturn different. The percentage declines investors faced this February and March took many months, if not years, to face in the two most recent market declines before the pandemic (the global financial crisis 2008–2009 and dotcom 2000–2002). This time, it was like everything was accelerated, including the responses of the government and Federal Reserve that have created a similarly volatile positive outcome in the markets thus far in the wake of the March market lows.
While I do not think this current event is over by any means, it has been very different in its extreme behavior. Amidst this uncertainty, I think having a financial plan is what will be the difference in whether an investor has long-term success.
Article is used with the express permission from the San Fernando Valley Business Journal.