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Coronavirus Market Crash – What’s Your Wealth Manager Doing?


Market Crash (updated 2021) – How Ultra High Net Worth Investors Can Be Ready for the Next One

Plus: What Your Financial Advisor Should Be Doing Before the Next Market Crash or Recession

The market crash of 2020 behaved much like other market crashes in several ways, but it also offered a fresh and potent reminder of how ultra high net worth investors should be thinking about their investments and the stock market.

When market crashes like this happen, most people wonder act like a deer in the headlights and wonder how they should be responding. Do nothing and wait it out? Sell and take the losses? Buy low and capture gains? Fire your financial advisor? Hire a financial advisor?

Market crashes are confusing. They test our risk tolerance.

Here’s the proper response if that’s how you’re feeling: Do something different to prepare for the next crash. Don’t stick with the same advisor or the same approach, or the same thing will keep happening. For some specific ideas, keep reading.

You could start by choosing a new financial advisor. But you must choose one who can safely lead you through the next market crash. To help with this, get The Ultimate Guide for Choosing the Best Financial Advisor for Investors with $10 Million – $500 Million Liquid Assets.

You can also set up a free introductory call with one of our founding wealth managers.

Market Crash 2020 Lessons – Preparing for the Next Crash

When you’re in the midst of a market crash, your options for how to respond are limited. You may have already lost a bunch of money. While you do have some options, that’s not the focus of this article. But you can use this free guide to learn how to improve portfolio performance.

The greater lesson is to make a commitment and a plan to change your investment approach so you don’t suffer the same losses in the next market crash, which will surely come because they always do.

Here are three ways to prepare your ultra high net worth portfolio for the next market crash:

1.Specify Your Dreams and Desires for Life

Too much attention is devoted to money and investments, and far too little on what any of this is for. We have had people who call our office, who have over $50 million just sitting there and they are doing nothing with it.

So what is the point?

No estate plan. No plan to protect your wealth. No travel plans. No retirement plans. No charitable giving plans. No business startup plans. They’re just continuing to work, process transactions, manage their bank accounts, and go through each day.

For what?

Your money must have a purpose. How do you want to use it to make your life more fun, more interesting, more impactful, and more secure?

Investing planning without goals is pretty pointless. Otherwise, what are you investing it for?

And in terms of market crashes, if you have $60 million, and the market crash of 2020 or any other crash crushes your portfolio and leaves you with ‘just’ $30 million – if you have no goals or dreams or plans for this money, who cares? Your $60 million was just sitting there doing nothing. Now your $30 million is doing the same thing.

See what we’re getting at here? Without goals, dreams, and desires, there’s no real reason to think about responding to market crashes.

2.Build an Investment Plan Centered on Your Goals

With your specific dreams and goals clearly identified, you can now get to work creating a plan that will achieve those goals.

Want to leave $10 million to split among your heirs? That’s a goal. Want to purchase a bunch of property in the wilderness and build a ranch to retire on? That’s a goal. See how we create customized high net worth investment plans.

Each of your goals will have a dollar amount attached to it. As you succeed in funding each of your goals through your investment plan, you can check each one off the list and keep building wealth until all your goals are funded.

As you get closer to that point, it makes little sense to remain heavily invested in high risk securities. Yet we have high net worth investors calling our office with 80% or more of their wealth invested in stocks. That’s a recipe for terrible and needless losses!

3.Adjust Asset Allocation Accordingly

With your plan in place, all that remains is to manage it such that future market crashes don’t set you back in the pursuit of your goals.

The most important component of this, by far, is your asset allocation. With a smart asset allocation built around your goals, that shifts along with changes in your life so your future is always financially secure, you will be well-positioned by the time the next market crash hits.

And while everyone else is panicking again, like they always do, you can sit back and rest easy, knowing that your plan is still on track.

Market Crash 2020 – What Your Advisor Should Be Doing

For high net worth and ultra-high net worth investors, market crashes are the moments when your wealth manager shows their true worth. Or fails to…

As we frequently say on this blog, anyone can do well when times are good. But whenthe market is crashing by double digits and the last several years of gains are being wiped out for so many, what is your financial advisor doing about it?

Maybe they sent you an email, or maybe they have even called you. But did they really eliminate all your concerns about the future of your portfolio?

Aren’t you important enough to them to merit a peace of mind and financial serenity call?

We should think so. How many ultra-high net worth clients do they have? How long would it take to give you a quick phone call and update you on the game plan they already had in place?

If your advisor has been silent or lacking a reaction to the markets, maybe it’s because they don’t know what to say other than “stay the course,” or similar useless advice. Just cower in your hole until the storm blows over and hope the damage isn’t irreparable.

In other words, if you’ve been given a financial “shelter in place” strategy, you’re being done a dis-service.

What a financial advisor who is truly an expert at helping ultra-high net worth clients should be doing depends in a large part on your asset allocation before the virus crash hit.

And that’s the critical point. What is your asset allocation? How were your investments arrayed before the 2020 market crash, or any other market crash?

If you are losing 30%, 40%, or 60% of your wealth, the plan your advisor created isn’t working!

Client Story from the Market Crash of 2020

We spoke to one of our own clients who had investments with multiple firms when the 2020 market crash hit. One such firm lost him $600,000 in just four weeks. This is a BIG name firm.

And like most people would feel when losing so much in such a short time, he was frozen in place, unsure of what to do. Making things worse, his advisor pitched him the ridiculous “just hang on and everything will be fine” speech!

It won’t be “fine.” If your financial advisor is counseling you to “stay the course”, we encourage you have a short chat with Pillar Wealth Management CEO and Co-founder, Hutch Ashoo. With his deep experience and expertise spanning 30 years of black swan events like the 2020 market crash, it could make all the difference right now–saving you, the ultra-high net worth investor, tens of thousands perhaps millions.

There is a better way. A better way to protect your wealth as well as maximize market gains.

Our Recommendations to Help One Client Save $300,000 in Taxes

One of the most effective methods of reducing costs – including losses like the ones happening now during the covid-19 crash – is called tax loss cultivation. Using this strategy effectively requires proactive and timely interventions.

In other words, it takes a wealth manager who knows what they’re doing and doesn’t panic even in times like this.

We explained to this client that he will be able to save $300,000 in taxes if he takes timely action. He is currently sitting on some short-term gains that will be charged with ordinary income tax at the highest tax bracket. By holding on to his investments and taking some losses, he will be able to use some of those to offset his tax bill from his current and future gains.

The client in this case doesn’t want to reduce the over-exposure to risk. He is afraid he’ll miss the uptick in the market when it corrects so we assured him we’d still be able to capture his losses while avoiding a wash-sale. This way he’ll participate in future market gain, or losses (per his wishes), yet is able to slash his loss by $300,000 through the tax savings.

Yes, he will still lose some money. But he will lose far, far less than if he just sits by the phone waiting for his big name brokerage to call.

Are You Getting Financial Advice Like This from Your Wealth Manager?

Maybe now is the time to seek new guidance. Go ahead and click below to take action before this market crash and possible recession gets worse, or better!

Schedule a chat with co-owner and CEO Hutch Ashoo