My mum is originally from the East African Island of Zanzibar, a tropical Island with white sandy beaches and crystal clear blue waters. You would think that she would have a great love for swimming due to her Island roots, but it transpires that instead, my mother had actually picked up a great love of spicy hot food, especially green chillies. I remember mealtimes would be accompanied by a plate of green chillies, and my mum would comprehensively chomp through a few as if they were strawberry liquorice. However, it soon got to a stage in her life where her fondness for green chillies would cause her immense pain and discomfort through heartburn. I remember her describing it as a fire spreading through her chest. Quite awful really. I myself don’t know where the enjoyment lies in eating them in the first place. Nonetheless, there was always a saviour ready in our household: a bottle of Gaviscon. This thick gloopy liquid seemed to provide the relief that my mum so badly needed, putting out the fire raging inside her, providing a cooling, soothing effect.
Reflecting on this I realised that all my clients have suffered or will suffer from financial heartburn at some point in their lives, and I am to be their bottle of Gaviscon!
So let’s take a look at a few of the symptoms of financial heartburn and how a great adviser can help relieve this.
1: Reacting to the News
Switch on the evening news, read the paper or click online and you are sure to be bombarded with sensationalist headlines. The negativity portrayed and financial Armageddon predicted by all the news outlets have only one objective: amassing viewing figures or clicks. The more viewers and clicks received the greater the advertising revenue – it’s the way the media industry operates and as consumers we get hooked in. The media are constantly moving from one crisis to another, and it’s always funny how ‘this time is different’. There are things happening in the world that we need to be aware of, but I find the drama serves no purpose other than to cause panic in the minds of the masses and to create a sense of doom and gloom. I mean who wouldn’t get panicked and stressed out with headlines predicting we are about to fall off a cliff!
Unsurprisingly the news is the main source of financial heartburn for many clients. “Should we move our portfolio into cash as it looks like we are heading into a recession”, “I don’t think now is a good time to invest with Brexit around the corner.” Being a great adviser involves bringing a sense of calm to the situation, with the knowledge and wisdom that reacting to news serves no beneficial purpose for the wealth creation of clients. Reminding them that despite the end of the world predictions, the Great Companies of the World will continue selling real goods to real people, just like they have always done, and this too shall pass, just as all previous crises have. In this way, the great adviser cools and soothes the financial heartburn of the client, stopping them from taking detrimental actions against their long-term wealth and prosperity.
2. Market downturns
Studies have shown that the average intra year fall in the US stock market over the last 30 years is has been 14.2%. That is the difference between the market high point and low point in any given year, not where the market has finished at the end of the year. Over three to five years this figure is approximately 30%. It tells us what we already know: that prices do fluctuate over the short term and markets can fall fairly substantially. The media, as we have discussed, will jump onto any sign of market downturn in order to cause panic and drama, even though they are well aware of its normality. Great advisers know that this is part of the long-term investment journey, however many clients without a great adviser may suffer the financial heartburn associated with a falling market. Great advisers know that this shall pass, and they comfort their clients with their experience and knowledge of how volatility is not to be feared but embraced. Great advisers actually take the time to educate their clients from the outset about the temporary decline in markets, and how they are not to be panicked into selling out. In fact, falling prices for the experienced, disciplined investor is akin to a ‘Great Sale’. I am far happier when markets decline, as my monthly contributions are buying more shares in the Great Companies of the World. Essentially, I am getting more bang for my buck!
3. Unanswered Questions and Planning
A lot of stress and anxiety is caused where clients have not been able to answer the key questions that will help them have a dignified and independent retirement.
Can I afford to send my kids to university?
When can I stop working?
Will I have enough money to do the things that I want when I stop work?
Will I run out of money in retirement?
All of these emotive questions need to have answers. Whilst not always definite and certain since outcomes in life are dependent on so many unknown factors, an initial starting point is needed for clarity. This is where great financial advisers help their clients through the building of financial plans using financial forecasting software. It is why I will refer to myself as a Financial Planner as opposed to an Adviser (a discussion for another day), because that’s what I do. I build financial plans for my clients to help them answer the really important questions in life. I can tell them with honesty and clarity whether their current course of action is likely to see them meet their goals and objectives, in which case, Happy Days, let’s keep the ship on course. Or actually, we are not going to reach our destination based on the present actions you are taking, so let’s look at a few ways of making some course corrections. With an ongoing relationship and regularly reviewing the plan, there is a chance that those goals can be eventually met, if not fully then at least partially. I have always found that clients that have a clear plan to follow, one that is kept up to date on an ongoing basis have a much lower level of financial stress and anxiety.
The above are just a few of the key areas where great advisers will help their clients. It stretches to other areas such as organisation and administration, helping clients to keep clear and uncluttered financial records. Simplifying the complex world of financial services and helping clients to move towards action when they would normally be paralysed by the choice of products, and end up doing nothing.
It might be time for you to reach for a bottle of Gaviscon if you are suffering from financial heartburn, or if your current heartburn medication is not working as well as you would like, it might be time to try a new one!
This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
Past performance is not a reliable indicator of future performance.
The value of investments may go down as well as up and you may get back less than you invest.
