The ongoing public health crisis, associated with the COVID-19 pandemic, has had a significant impact on business activities, government at large, financial markets, and individual households. A recent research paper was published by Yuanshan Cheng and his colleagues entitled, “The Value of Registered Investment Advisors during the COVID-19 Financial Market Crash”. This is the first study to find that during the market volatility, clients working with Registered Investment Advisors (RIAs), like Runey & Associates, tended to sell less and buy more during the market downturn as compared with self-discretionary clients.
The study found that, especially during negative return days, financial advisors communicated frequently and positively with their clients. Positive communication facilitates conversations that highlight positive market news to address client concerns and help keep client expectations of future market returns buoyant, which discouraged them from selling when prices were down.
The Covid-19 Pandemic Market Crash
The Covid-19 Pandemic Market Crash in early 2020 produced historical market swings. It was a true test of an investors ability to know when to sell, hold, or buy funds. The pandemic produced more extreme volatility over 22 trading days than any other historical period.
Studies now reveal that investors who had a passive investment strategy and worked with a Registered Investment Advisor fared better than retail investors who held short term, active investment positions during the Covid-19 market crash.
Value-Add of Working with a Financial Advisor during a Market Crash
One of the most notable and key reasons why investors that work with a Financial Advisor have better success is because their Financial Advisors communicate frequently with them during market volatility.
Their communications consist of positive news and guidance during the most volatile trading markets. This communication helped investors stay the course during the recent market crash. This is a significant value add of having a Registered Investment Advisor as your investment partner.
Please share this article with friends and family who can also benefit from having a positive relationship with their Financial Advisor during a Market Crash.