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volatile-markets-haven’t-deterred-financial-planners-from-making-bold-moves-on-behalf-of-their-clients

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Volatile markets haven’t deterred financial planners from making bold moves on behalf of their clients

CPAs appear to be divided in how they’re approaching clients portfolios during the pandemic

A new survey looks at how financial planners have handled a turbulent few months.


JOHANNES EISELE/AFP via Getty Images

A lot is being said about retail investors jumping into the stock market these days, but they might just be following the lead of financial advisers.

The high volatility on Wall Street in recent months hasn’t deterred some financial planners from making more stock investments for their clients, while others have taken the opposite approach, a new survey shows.

Forty-one percent of advisers said they’ve been increasing their clients’ equity exposure, and yet 31% said they’ve been reducing their clients exposure, according to a survey asking 870 advisers how they’ve been helping clients in the face of the coronavirus outbreak.

Even though the Dow Jones Industrial Average
DJIA,
-2.71%

and the S&P 500
SPX,
-2.58%

have been on upswings since low points in late March, it hasn’t been a smooth ride.


Three quarters of the financial planners surveyed said they weren’t making big changes.

More than three-quarters (77%) said they only made minor modifications to their clients’ financial plans while 23% said the changes were “substantial.” On the whole, planners said they made changes for about 30% of their clientele.

Investment allocation was the most common change (62%) but it wasn’t the only one. For example, 59% said they discussed their client’s spending decisions and 43% said they changed tax strategies, given the unusual context.

The Treasury Department pushed the income tax return filing and payment deadline from April 15 to July 15 so households would have more cash on hand in early spring as unemployment rates surged. (As of May, the jobless rate was 13.3%.)

But the postponed deadline also presented an opportunity for financially secure households to put extra money into an individual retirement account and shrink their 2019 tax bill.

The stimulus bill passed in late March also allowed IRA owners to withdraw $100,000 this year and pay it back in three years without any consequence on future income tax returns — but it can get complicated, observers say.

Don’t miss:Opinion: COVID-19 crisis creates a perfect opportunity for Roth IRA conversions

Forty-one percent of advisors said they made changes to clients’ IRAs, Roth IRAs and other retirement accounts.

The same survey has a grim reminder that the flurry of financial advice is coming during a public health crisis. Twenty percent of the polled advisers said they’ve been helping their clients with estate planning changes and 12% said they’ve been weighing in on health care decisions.

As of Wednesday, the U.S. had 2.34 million confirmed coronavirus cases, according to the Johns Hopkins University’s Center for Systems Science and Engineering. The virus had killed 478, 289 people globally, including 121,279 people in America.

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