The Impact of the Coronavirus

4/1/2020

As of April 1, 2020, the coronavirus had actually infected only a tiny percentage of citizens in the United States. But it has affected every single person’s life in one way or another.

Most citizens are staying at home as much as possible to avoid catching or spreading the virus. While some families have been able to come together to wait out the situation, other families have had to remain separated. Commerce has become almost entirely electronic. Taking a walk has become a luxury, just for a change of scenery.

The social changes are one aspect of the world we all currently live in. But almost everyone has been impacted financially as well. Millions of people have lost their jobs as a result of this crisis. Others have had work hours cut.

Invested dollars have also been impacted. The Dow Jones Industrial Average lost 10,000 points through the month of March, and every investment product saw its value decrease as a result. Whether you invest directly in individual stocks or have your assets invested in mutual funds or retirement plans, you have lost money as a result of the coronavirus.

Spectrem’s study The Corona Crash: What Advisors Should be Saying To Investors Now looks at the effects the coronavirus has had on investor attitudes and behaviors, and determines just how the advisor-investor relationship is being handled in this state of constant confusion and change.

There is definitely a day-to-day change in asset value. The stock market has tried to rebound a bit from the huge losses already incurred. But the question the study asks, which you should be asking yourself as well, is “What does my advisor believe I should do about my portfolio losses today?”

The Corona Crash will be updated monthly through May to determine how investor sentiment changed as the coronavirus maintained its hold on society.

In the March study, conducted March 4-9, 2020, investors were asked if they had heard from their advisor as the stock market crash was happening full steam. Forty-two percent had heard from their advisor, and a majority of those investors said their advisor told them to hold steady with their asset allocations. Only 10 percent of all investors had been told by their advisor to make changes in their portfolio to reflect the changes in the economy and the stock market results.

Are you in either of those two groups? Were you pleased that you heard from your advisor? Did you fully accept the recommendations your advisor made in light of current events?

Of the investors surveyed, 32 percent said they had not heard from their advisor and were not disappointed. Only 5 percent said they wished they had heard from their advisor. Ten percent had been proactive and made the call themselves to see what their advisor was thinking about future investment plans.

Are you in one of those three groups? More importantly, have your actions or non-actions changed as more news comes out about business closings and even bankruptcies in American business?

Is it the job of your advisor to be proactive in contacting you, or is it the responsibility of the client to let the advisor know they want to have a conversation? And how often do you want that conversation to occur?

Of the investors surveyed, only 9 percent had sold equities to reduce losses in the suddenly bearish market, while 17 percent had taken advantage of lower stock prices and purchased equities. Again, it will be revealing to see how respondents have changed their approach after a fiscally bitter March.    

These are all questions the April edition of The Corona Crash will answer, along with a new set of topics which have come up as the situation extends into April.