Here’s what advisors are telling their clients as recession fears grow

0
99


JGI/Jamie Grill | Tetra images | Getty Images

As the U.S. economy shrinks for a second straight quarter — one definition of a recession — many Americans aren’t prepared for an economic downturn.

However, financial advisors say there’s plenty that is in your control.

Fewer than half of Americans feel “financially secure enough” for another recession, according to a survey from digital wealth manager Personal Capital.  

Among those surveyed, the top fears include the inability to plan for the future, trouble paying bills or losing a job, the report found, polling roughly 1,000 cross-generation Americans in May 2022.

More from Personal Finance:
How investor portfolios are shifting as the Fed hikes rates
Gaps in access to paid leave lead to financial hardships
What the Fed’s interest rate hikes mean for you

However, the average emergency savings is roughly $7,600, according to the survey, which may be lower than needed. While advisors typically recommend three to six months of living expenses, other experts may suggest more for added flexibility

What advisors are telling their clients

If you haven’t evolved and you don’t have a skill set in demand, then irrespective of what’s going on in the economy, you could be in your own personal recession.

Charles Sachs

Chief investment officer at Kaufman Rossin Wealth

Since no one can predict when a recession may happen, it’s best to focus on what’s in your control, such as how much you’re spending and saving, he said.

“If we’re looking at your personal balance sheet, and like many people, you’re living above your means, that’s arguably not sustainable,” Sachs said.

And recession or not, job loss can happen at any time. 

“If you haven’t evolved and you don’t have a skill set in demand, then irrespective of what’s going on in the economy, you could be in your own personal recession,” Sachs added.

How to handle stock market volatility

Indeed, the market’s 10 best days over the past 20 years happened after some of the worst, including during the downturn in 2008, a recent J.P. Morgan analysis found.

When Parrott’s firm receives a panicked phone call, it revisits the client’s financial plan to review how stock market volatility may affect their goals.

“I know every advisor probably says ‘stay in the market,’ but we back it up with their financial plan and show them the data,” he added.



Source : CNBC