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Here’s what advisors are telling their clients as recession fears grow

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As the US economy contracts for a second straight quarter – a definition of a recession – many Americans are unprepared for an economic downturn.

However, financial advisers say there is a lot in your control.

According to a survey by digital wealth manager Personal Capital, less than half of Americans feel “financially secure enough” for another recession.

Among those surveyed, the top fears include the inability to plan for the future, difficulty paying bills or losing a job, according to the report, which surveyed about 1,000 Americans of all generations in May 2022. .

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However, the average emergency savings is around $7,600, according to the survey, which may be less than needed. While counselors generally recommend three to six months of living expenses, other experts may suggest more for more flexibility.

What advisors tell their clients

If you haven’t evolved and don’t have an in-demand skill set, then regardless of what’s happening in the economy, you could be in your own personal recession.

Charles Sachs

Investment Director at Kaufman Rossin Wealth

Since no one can predict when a recession might hit, it’s best to focus on what’s in your control, like how much you’re spending and saving, he said.

“If we’re looking at your personal balance sheet and, like a lot of people, you’re living beyond your means, that’s probably not sustainable,” Sachs said.

And recession or not, job loss can happen at any time.

“If you haven’t evolved and you don’t have a skill set that’s in demand, then regardless of what’s happening in the economy, you could be in your own personal recession,” Sachs added.

How to manage stock market volatility

Growing recession worries have only deepened as investors grapple with runaway inflation, rising interest rates and continued stock market volatility, experts say.

“People are on the defensive in the very short term, regardless of their long-term goals,” said Bill Parrott, CFP, president and CEO of Parrott Wealth Management in Austin, Texas.

While some have lingering fears about the 2008 financial crisis, emotion-based money moves, such as impulsive selling of assets, can miss out on future gains and put their plan in jeopardy, he said. -he declares.

Indeed, the market’s 10 best days over the past 20 years came after some of the worst, including during the 2008 downturn, according to recent analysis by JP Morgan.

When Parrott’s company receives a panicked phone call, they re-examine the client’s financial plan to examine how stock market volatility may affect their goals.

“I know every adviser is probably saying ‘stay in the market,’ but we back it up with their financial plan and show them the data,” he added.

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