Ep #27: COVID-19 Planning Lessons Re(Learned): One Year Later

Benjamin Haas |

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Benjamin Haas  00:03

Hi everyone and welcome to A/B Conversations where we will help you CFP your way out of it. A podcast where you get into the minds of a couple of Certified Financial Planners on how we think and feel about everyday financial planning questions and what should really matter most to you. A healthier financial life starts...now! Hey Adam. Welcome back to A/B Conversations. How are you?


Adam Werner  00:30

Doing great. How are you?


Benjamin Haas  00:34

Very well. The sun is shining, it's a beautiful day. We've crossed the one-year anniversary of what was the bottom of the market so we're a year now removed (hard to believe) COVID-19 effects. We thought it'd be a great podcast to just reflect a little bit one year later, what are the lessons that we either learned or as we'll focus on today, some of it's just we were reminded of and we re-learned and we don't want to stick to the obvious stuff. Right technology works, it's good to have work life balance, hugs are great. We wanted to focus more on the financial side. So go with me down this, walk through Memory Lane here. Let's maybe start with some of the investment stuff. What are the things we re-learned over the last year?


Adam Werner  01:27

I think the most obvious, a year later, and even this happened a heck of a lot sooner than a year but it's the don't panic when it comes to investments, making decisions at incredibly emotional and volatile times may lead to some decisions that you may regret at some point in the future. For us, it just reinforced the fundamentals.


Benjamin Haas  01:53



Adam Werner  01:54

Stay diversified, stick to your plan. The three-bucket theory that we preach of have enough cash bond exposure, stock exposure for your specific situation, it's different for everybody but that should allow you to ride out periods of extreme volatility and allow you to get to the other side of that when things feel a little bit calmer and more normal.


Benjamin Haas  02:20

Markets don't always have to make sense to us. Right? The economy's not the market. We learned the lesson. Again, it's a little bit more than just the fundamentals but don't fight the Fed. There were mechanisms that came into play that maybe people weren't anticipating. So yeah, I think when it comes to investing, don't time things. We learned that and as quickly as things went down, things came back up so have a plan and stick to it.


Adam Werner  02:46



Benjamin Haas  02:47

But let's move on to maybe the nature of our work. Investments are important but I think we re-learned some really important financial planning fundamentals too. So I know I've got a little bit of a checklist. Let me throw it to you first. Anything fall into that camp?


Adam Werner  03:04

I think the biggest thing for me was and I don't want to step on your toes but I think it just reinforced, if there are open items, even if they are just the fundamentals, like we talked about. It’s "do you have the right amount of life insurance? Do you have your estate documents done?" Just the simple things that let's be fair, aren't the fun things to do when it comes to financial planning, not that anything in financial planning is fun for everybody. But those are just the items that just check the box, just get it done and in times of volatility and the unknowns of pandemic world, just your own financial situation. Just get them done, you can just set that aside and be done with it.


Benjamin Haas  03:51

Yeah, it almost reminds me of conversations that we've had in the past with people that well, you know, that won't happen or this, this won't happen. You have a cash reserve for things that are really unpredictable and you think about the number of people that were unemployed pretty quickly. A really dramatic time now, even if you weren't unemployed, were you needing to take some sort of leave because you're homeschooling kids now. And before we even know, what are going to be the rules of the game or how is unemployment really going to be supported? Or how is my employer going to view these things, that panic hopefully is not there if you know you have this cash reserve or something that you can lean on. So even if it wasn't the predictable, even if it's not just us throwing it in your face, you need to have three to six months, whatever it is to be okay, building a cushion before you've bought the next toy or, you know, socked it away into a retirement account that you can’t access.


Adam Werner  04:50

I think that point on cash reserve is such an important one because it's fundamental to us that you should have again, depending on your situation three to six months of your expenses kind of in a safe cash position and we often get asked the question of, well, do I really need six months? Can I just do three months? Can I invest the rest of it? Like if I don't need it? I don't think I need it. Can I put it in something that's going to grow? And it's your words, not mine, it's not the “sexy” thing to do is just to have a bunch of cash in the bank. But yeah, when all of these things just get slapped on your lap in March of 2020, life, as most of us knew it changed. Whether you're now working from home and you hadn't before, which certainly my circumstance. Homeschooling kids. I know, for my family that meant desks for the kids and chairs and just technology and equipment. In those times when the just stuff hits the fan and you need to react and fairly quickly. You don't want to have to feel like that's another added stressor of now, how am I going to do these things financially.


Benjamin Haas  05:59

I would bring to light then too, when we talk about financial planning things re-learned, there are times to be opportunistic and I'm not just talking about if you add some excess cash reserve, boy, it would have been great and I'm sure there's plenty of people out there that looked at the end of March and went, this is a great buying opportunity. But even if you don't have cash to put to work from an investment standpoint, those dips are an opportunity to maybe contribute a little bit more to your retirement account or an IRA or we even went through the process with some people. If it's in your plan in the future to maybe convert some taxable dollars into tax free dollars. What a great opportunity a down market is.


Adam Werner  06:44

I think that's one thing that's always on our radar but the swiftness of just how fast the market fell in that short period of time and then, conversely, how quick it rebounded, sometimes a lot of those decisions, you didn't have the time to really make it if they are those bigger picture decisions. But now for us, I know in my head, it's in the future, if it's not a 30% drawdown, maybe it's 10%. A 10% correction is pretty normal that happens every 18 months and recently that feels like it may have happened more frequently than that, but use those as the small opportunities to just take advantage. If you're going to do these things anyway, it may present a slightly better opportunity to do them and again, for me, it's not feeling like you have to time the bottom or time the top and let's get it perfectly correct. But something is better than nothing and if it's a little bit lower than when it was, a couple weeks ago, and that means I can convert more into my Roth IRA. That's a good thing.


Benjamin Haas  08:01

So we want to bring that back up because now to your point, we don't want people to look at these draw downs in the market as such a horrible thing. Nobody likes to lose money but it is to say there are things that I can do that now may counteract some of that negativity. I got money now into a Roth IRA and that rebound is all in a tax-free spot. This is a good thing just to go down that list. Again, cash reserves are important, get those insurance and estate documents in order. I mean, hate to feel that, man, this pandemic could have been a really negative situation for some people health wise. We hope a lot of the people listening out there that, you didn't lose a loved one. We know that that happened for a lot of people but if you were in that age bracket or had a condition, you were fearful of health and for good reason, man to not have these documents in order just made it all the more stressful. To your point let's get them done and then let's think opportunistically with financial planning.


Adam Werner  09:00

I think that as just the theme is slightly changing the narrative a little bit. And that's often easier said than done, at least in our experience with clients of just trying to turn that conversation a little bit from Yes, the market is down. To feeling like we're doing some sort of damage control, or just, I have to just tune out the noise and just focus on not paying attention, which is kind of an oxymoron. But yeah, turning that now into a potential positive. That's something that you can control. Here's something that you can do, even if it's something relatively minor, but that to see those negative events as actually a positive in the short term, because historically, these things happen. We see market volatility. It's always rebounded, it may have taken longer over certain periods of time but as long as you are following the fundamentals of the planning process and have the building blocks in place, it shouldn't be a catastrophic impact to your plan where those, what we're calling emergencies may actually be opportunities at the same time.


Benjamin Haas  10:09

So then I would move towards the last kind of category, I think of financial things and maybe I need to clarify this as financial. But, if our theme is aligning people's values, vision, and wealth, here, we are talking about the wealth stuff, let's focus on the values and the vision. I'm going to be an optimist for people. I would hope that there were other financial benefits, mental and health benefits that came out of this COVID-19. Maybe it was that work from home environment meant spending more time with my kids or flexibility of my time to work out more, I don't know. Maybe people got rid of stuff. I thought I read that there was a surge in donations. I looked around the room and you're like, man, I don't even use half this stuff. So I hope people could also learn what mattered most and reconnect with people in a different way, the whole point that I want to make is, we certainly see that people make their best decisions, when they have peace of mind or clarity of mind so seek that balance. It's not just the financial side of things, but always try to put yourself in a spot where stress and anxiety doesn't lead you to a worse financial decision.


Adam Werner  11:23

Yeah and I think you said that very well and that was one thing, when we were talking about this earlier, that just was a great point to make of, we talked about it all the time when it comes to financial planning. Have that plan in place in a much calmer time. That doesn't mean that a March of 2020 happens and you don't have that plan. Let's still get that in place but theoretically, you could do that in a calmer time. So that when things happen because inevitably, they will, that you're making decisions, or at least leaning on the building blocks that you've already put in place, that you're just essentially following the script at that point. If A then B, and not just complete, wide open wilderness of unknowns and what should I be doing?


Benjamin Haas  12:10

I think that's a good way to wrap it up and if we are kind of packaging that all as lessons that we hope we're relearned, then to the listening audience that has a plan, right, this is why you have the plan and to the listening audience that doesn't, let's use last year is a really good example of why getting one is a good idea.


Adam Werner  12:29

Yeah, it doesn't have to be complicated. We've said this in other podcasts, a lot of the financial planning process is truly just let's review the fundamentals. Make sure those boxes are checked and then as there are bigger discussions, bigger decisions to be made, then you can build off of that but it doesn't have to be complicated.


Benjamin Haas  12:51

Well said. So if there are questions reach out. We're here.


Adam Werner  12:56

That's right.


Benjamin Haas  12:57

All right. Thank you, sir.


Adam Werner  12:59

All right. Thank you.


Benjamin Haas  13:00

Another one of the books. We'll see you soon.


Adam Werner  13:03



Benjamin Haas  13:13

Hey everyone, Adam and I really appreciate you tuning in. Please note the opinions we voiced in this show are for general information only and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant and financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!

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