Depending on how we choose to look at it, a crisis can bring wisdom. This pandemic is no different. It reminds us of the fragility of life. It also teaches us about economics, socio-cultural trends, the financial industry, the world of health care and many other areas.
We see some companies struggle and others thrive. As they say, “We are in the same storm with different boats.” None of us know how long the storm will last. Yet, it’s not about the storm, which is uncontrollable. Instead, it’s about focusing on what we can control. This includes preparing what kind of boat we use and what equipment to add to the boat to better survive the storm. And we know every choice has consequences.
These are a few of the things the pandemic taught me about preparing for a storm.
- Storms can happen at any time, and their duration is uncertain. With storms comes a broad range of possible financial risks. Yet, even big storms are survivable if clients follow sound financial advice as early as possible.
- A physical office is not a necessity. I can efficiently conduct online meetings from home. So I don’t need to spend money renting or buying office buildings. I can divert this budget to other places, such as daily or weekly office space rental (if necessary) and professional and personal development seminars.
- The plans we prepare for our clients bring positive outcomes, especially during crises. Any risk-transfer plan is possible to implement well with a financial solution/insurance product with instant benefits.
- Financial planning during a pandemic is different, and I’m sure it will be different after the pandemic ends. Before the pandemic, the emergency fund formula I recommended to clients was six times their routine monthly expenses. During the pandemic, I doubled the emergency fund to 12 times. During a pandemic, however, clients focus more on hospital health benefits, income protection due to critical illness and life insurance with higher benefits.
- Always be aware of developments in the global markets, regardless of what’s happening in your local environment. Historically, crises occur about every five to 10 years, and they can begin elsewhere before showing up at your front door. Whatever it is, we as financial advisors are required to prepare the best “boat” for our clients in all types of weather. Knowing what’s happening globally helps you prepare sooner for when the crisis becomes local.
For a good financial advisor, a broad and flexible perspective about crises is critical, because we must properly deliver effective solutions to clients — for both times of soothing breezes and battering winds.
Kennedy Sumarlie, AWP, of Jakarta, Indonesia, has been an MDRT member since 2018.