For financial planners, crash course in hand-holding
Raj Sharma is used to hard numbers, cold calculations, and strategic thinking. But the 50-year-old private wealth adviser now has a new role: therapist.
As the gyrations of the market rocked Wall Street, Sharma fielded a frenzy of calls and e-mails from his clients - the panicked, the furious, the frustrated, and the merely anxious over the safety of their investments. Over the past two weeks, Sharma and his team of advisers at Merrill Lynch in Boston tried to comfort more than 100 clients, giving out their personal cellphone numbers to call day, night, and weekends. He sent daily e-mails updating investors on market events and encouraging them to stay calm, he pored over portfolios, and he tried to better understand his clients' tolerance for risk in this era of the 500-point daily Dow drop.
"Our challenge has been to be disciplined and level-headed, to hold hands, to assure people about long-term strategies," said Sharma, even as he watched his own investments take a beating and his firm sell itself to Bank of America. "They need to know you care, you're watching their port folios - and just keep reassuring."
Across the country, financial planners and other wealth managers have gone into overdrive to take on the barrage of questions from clients, relatives, and friends worried about their investments, turning the typically tame profession upside down. The financial meltdown on Wall Street has sent daily shockwaves, with the government's bailout of insurance giant AIG, money markets losing value for the first time in recent memory, and the disappearance of five major Wall Street investment banking firms.
Americans have more assets than ever before that are vulnerable to the market volatility through individually controlled retirement plans like 401(k)s. Workers have accumulated about $3 trillion in 401(k) accounts - up from $1.6 trillion in 2002. Three decades ago, 401(k)s barely existed, and Americans relied largely on pensions with funds contributed and managed by their employer, who absorbed the risks.
For weeks, Christine Osborne, 61, has been glued to the television, watching endless business news coverage. She's called her financial adviser in Chicago and exchanged e-mails, but had refused to look at her portfolio until last Saturday.
"What keeps me from clinical depression is the trust I have in my financial adviser at UBS," said Osborne, of Newton, who is retired. "Since January, it's felt like a slow steady leak, a drain on my spirits as well. In the past two weeks, it feels like the leak widened into a hole. I lost a year of what I need to live on."
For people in or close to retirement, like Osborne, some financial advisers are suggesting changes to avoid further fallout. On Wednesday, Osborne sold one of her mutual funds that was heavily into mortgages at a huge loss to get the cash out before the value sank even further. Already, her portfolio is down about 8.5 percent. She is now considering trying to find a job.
To help head off the panic, wealth managers have put everything on hold, canceling meetings, postponing vacations, and clearing their calendars to answer questions from clients that once seemed inconceivable: Are money markets safe? Should I pour money into bank savings accounts? Should I take myself out of the market entirely and stash the cash in a safe deposit box?
In most cases, the advice was painfully simple: Do nothing and sit tight.
Some financial planners have likened the current fiscal turmoil to the burst of the tech bubble in 2000 or the stock market crash of 1987. But many advisers agree that the sweeping nature of the forces shaking Wall Street - when everything fundamental is in question, including the value of your home, the future of your retirement account, and the dependability of your bank - has made this a time of unprecedented uncertainty.
As a result, at Mintz Levin Financial Advisors in Boston, the group has worked 10-hour days, reaching out to all 350 clients and trying to ease the palpable anxiety and reassure clients that sticking to long-term investment strategies makes sense, according to president Robert Glovsky.
In one of her e-mails to clients, Sharon Rich, a financial planner in Belmont, wrote: "The big picture is to not panic. It is important to keep in mind the long term and not react too strongly right now. This is not admitting that I know where the market is going in the next few weeks or months, but it will go back up in the long run. Just wish we knew when."
"As a financial planner who began seeing clients 25 years ago, I have not seen clients and other planners so concerned," said Rich, who averaged 30 calls a day last week, three times as usual.
Many clients are agreeing to make no major changes to their portfolio, according to financial advisers, though some are insisting on moving investments from money market mutual funds into US treasury bonds because they are guaranteed by the government. Other clients are asking advisers to invest even more of their money because they see opportunities to buy stocks at a bargain.
Last fall, Dale Schutzman, 57, moved almost her entire portfolio out of stocks and bonds and into annuities and money markets. But the tumult on Wall Street had her frightened, and she began calling her Boston financial adviser John Osbon almost daily to make sure her money was safe. "Part of me wanted to go into denial, hide under the covers, and have someone wake me up when it's over. You start worrying about the worst case scenario, that banks stop functioning and people literally not being able to get money out of ATMs," Schutzman said. "In times like this, I want a financial adviser who wouldn't look at my fears as crazy."
Jenn Abelson can be reached at abelson@globe.com. 