Looking back at the crisis, financial advisors share lessons learned


● How did your clients react? “Anytime you have a downturn like that, and scary times in the financial markets — and this one was unique compared to most bear markets — you can actually see how people reacted financially. Did they make moves? Did they do things differently that weren’t part of the plan? Did they build up a safety net? You can actually see what people’s actions were.

People can say that ‘if this happens, then here’s how I will react,’ but we saw it happen, so we can actually look at the facts and see what people actually did. Some people did nothing and moved on; with other people, spouses had to go back to work and other people got out of the industry.”

● Any lessons learned? “I think what people worry about, and it’s a valid concern, is whether the next downturn, or bubble bursting, within an area of the economy will be contagious or be contained. Has financial advice changed since 2008? Absolutely, and you should call out anyone who says otherwise. It had to change, if you lived through [2008].

It’s the idea that when people have confidence in a particular stock, sector or asset class, you really need to point out that that confidence has been there in the past in other areas and that can quickly change. I am trying to be realistic as far as setting expectations. I remember somebody saying once that if Fannie Mae disappears, we might as well be invested in hardhats and batteries. That’s going back 25 years. Well, it didn’t disappear, but its stock was close to wiped out.

It’s important that we are realistic as far as the role that confidence plays in asset prices. The challenge today is that I’m getting a sense that more people are less worried about the down side than worrying about missing out on the gains that exist.”

“There wasn’t a lot of good to come out of 2008-2009. But, while I have more gray hair than I would otherwise have had, what I think was helpful to the fiduciary or independent portion of the industry was [the notion] that bigger isn’t always better.

The competitive advantage some of these large brokerage firms that imploded had had from their size was no longer an asset. I think that many independents and fee-only advisors have an easier time sharing their portion of our collective story.”