The Corona Crash, Advisors and Retirees



It is probably fair to say the shelter-in-place instituted as a result of the coronavirus pandemic impacted retired investors less than it did working investors.

After all, retired people are more likely home. They are not working, so they did not have a job to lose. Their portfolios are more stable and less risky than that of a younger, working investor, so the stock market crash was less impactful (although still very painful).

But, none of that changes the fact that retirees had concerns related not only to their health, which was more a concern for older citizens, but also about financial issues. While retirees may have more static investments than working investors, their need to rely on their investment income is greater because there is no income coming from their employment (or unemployment, for that matter).

Spectrem’s three-month study of investor attitudes toward the coronavirus shows that retired investors had less contact with their advisor than did working investors, but that retired investors regarded that contact with a more positive end result.

Keep in mind that retired investors are more likely to have a primary financial advisor. They rely on that advisor to assist them through the financial needs of a person who is no longer working. They are more likely to be dependent upon their advisor, and more willing to listen to what the advisor has to say.

In the April edition of Corona Crash: What Advisors Should Be Saying To Investors Now, 59 percent of retired investors said they lost at least a fair amount of their net worth due to the coronavirus stock market crash and other economic factors. That’s fewer than among working investors, but still indicates that more than half of retired investors felt a personal economic sting from the coronavirus pandemic and its effects on global commerce.

However, only 17 percent of retired investors said they received contact from their advisor to discuss the impact of the pandemic and possible changes to their investments and finances. That is lower than the 23 percent of working investors who received that contact and guidance.

While a majority of retired investors have indeed had conversations with their advisors since the virus became prevalent, much of that contact was spurred by the client and not the advisor. Twenty-one percent of retired investors have not yet had a conversation with their advisor about the impact of the coronavirus on their portfolios. That being said, most of those retired investors said they were fine with the fact that they had not had a conversation about the current state of economic conditions with their advisor.

Perhaps because retired investors have a greater dependency upon their financial advisor than working investors do, those retired investors were more satisfied with the performance of their advisor in the wake of the economic crisis. Only 10 percent of retired investors said their advisor should have been more attuned to the effects of the virus on economic and investment conditions, and 55 percent credited their advisor with being proactive toward handling mattes related to their portfolio in the last two months.

Retired investors are accustomed to having less frequent communication with their advisor in part because their portfolios tend to be more static. But, in the wake of this economic disaster, advisors should be attuned to the fact that their older investors have just as significant a stake in what happens with the economy, and less time to recover from any negative impact that occurs.



©Spectrem 2020

Keywords: retirees, investors, advisors, Spectrem, coronavirus, Corona Crash, communication