Tom Sedoric and Casey Snyder

This post was originally written on 9/16/2020, and was updated on 4/6/2021

As everyone tries to make sense of the ongoing COVID-19 pandemic and the corresponding market downturn, many people are wondering what actions they should take to position their finances. Though many investors have some sort of plan to help guide them, the majority are still concerned about how this pandemic will impact their futures and financial goals. Nobody has a crystal ball for events like this, but taking the time to develop a durable financial plan that prepares for the possibility of volatility means investors don’t need to be overly concerned when markets turn negative. Instead, with a plan, people can be comfortable in the knowledge that their contingency plan has already predetermined steps in place which is laid out to help ensure that their financial goals stay on track.


Resilient Financial Plans Take Time to Build

Many investors incorrectly assume that their existing plan is prepared to handle anything the market may throw at it. Over the last few years, we have enjoyed the strongest bull market in history. This market has made it easy for even those without a plan to appear to be financially successful. A rising tide lifts all boats, so to speak. However, the true strength of an investor’s plan becomes apparent during periods of stress such as the present COVID-19 related volatility. With that in mind, it’s important for every investor to carefully review their plan to ensure their assumptions about its resilience holds true. Since most people are currently quarantined at home, it’s the perfect opportunity for investors to reassess their finances and double check each aspect of their plan.

For those who are interested in putting together a durable plan, or updating one, the first thing to understand is that this will not happen overnight. Solid financial strategies are meticulously built over time to account for all the moving pieces in people’s lives. These pieces include income, tax exposure, debt, expenses, savings, investments, personal goals, as well as both planned and unexpected life events that crop up along the way. Each of these factors are interdependent and affects investors plans in different ways. Understanding and navigating these intertwined elements of a person’s life is crucial to helping someone reach their long-term financial goals. It is extremely important for investors to ensure they factor in every variable when developing their plan.


Sustainable Investing as Part of a Durable Financial Plan

As we help our clients build resilient financial plans, we encourage them to examine all of the options before them. Sustainable investing, also called ESG investing, is a sound investment strategy which we believe has a place in any strong, long-term financial plan. Not only can it yield solid returns, but it’s becoming increasingly relevant as companies and individuals alike are looking to align their money with core values.

Environmental, social, and governance investing strategies empower investors to support causes they believe in, such as diversity or public health, and divest from industries that contradict those values. In doing so, investors are able to promote a future they believe in.


Stick to the Plan

Once an investor has developed their plan and ensured it includes strategies to account for market volatility and other unforeseen events, the final, and usually most difficult, step is to stick with it. Sitting down and writing a plan can be straightforward, but staying disciplined and following the plan for months and years into the future can be extremely difficult for many people. As we work through the effects of COVID-19, everyone is currently focused on how their finances are reacting to pandemic-related market downturns. It is, however, a time in which investors need to remind themselves to stay just as focused once the market rebounds. Though there is no secret recipe to staying on track, investors who are able to remain disciplined over the long-term are more likely to see greater margins of success than those who don’t.

It will be some time before everything is back to “normal,” but now is neither the time to become complacent nor overly concerned. Creating a durable plan, or updating an existing one, will help any worried investor confirm they have a solid strategy in place for both present and future periods of volatility. As previously noted, successful plans will look different from individual to individual, but each plan must always include contingencies for navigating periods of market downturn. Investors who can create a robust plan and then diligently follow it will set themselves up for success. While it cannot guarantee their financial objectives will be met, a durable financial plan will allow investors to take comfort in the fact that they have given thought to, and planned for, future contingencies.


This material is provided for information purposes only and is not a complete description of the securities, markets, or developments referred to in this material. Any opinions are those of the author and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Sustainable/Socially Responsible Investing (SRI) considers qualitative environmental, social and corporate governance, also known as ESG criteria, which may be subjective in nature. There are additional risks associated with Sustainable Responsible Investing (SRI), including limited diversification and the potential for increased volatility. There is no guarantee that SRI products or strategies will produce returns similar to traditional investments. Because SRI criteria exclude certain securities/products for non-financial reasons, investors may forego some market opportunities available to those who do not use these criteria. Investors should consult their investment professional prior to making an investment decision.