Record bull run? Time to help clients prepare for the worst

The economy is growing, the stock market is soaring and unemployment remains low. It’s the perfect time to prepare for the worst.

Financial planners know that no party goes on forever. And it’s much easier to make smart decisions when things are going well than when times are tough.

Now’s the time to help clients plan for less prosperous investing periods.

Read: Investing tips are bull run becomes longest in history

Investments

Stocks just set the record for the longest bull market of all time at 3,453 days—about nine-and-a-half years.

It’s good news for client’s who’ve been invested that whole time. But the boom period for stocks might have thrown off their ratio of investments, making it time to rebalance. Help clients take a look at their portfolios and make sure they aren’t over-invested in stocks and adjust accordingly.

While you’re at it, make sure they’re content with the overall investment plan.

“I would suggest everyone take a look at their accounts and make sure they are comfortable, just in case,” said Jeanne Thompson, senior vice-president at Fidelity Investments. “Would you be comfortable with your plan if it were to drop 10%?”

What investors should be doing now is what they should always be doing, said Mark Stoeckle, CEO of the Adams Funds: be honest about how much risk they can take on to meet their goals and tune out the noise.

In short, make a plan and stick to it. Trying to time when you should be in or out of the market is a fool’s game, he said.

Debt and savings

It’s a good time for clients to rededicate themselves to the basics of financial health—paying off debt and saving adequately.

Interest rates are going up—that’s bad news if you’re carrying any variable debt, but good news if you have savings.

Savings have been earning little to no interest as central banks kept benchmark rates at historic lows, but this could start to change. After the Bank of Canada raised the overnight rate in July, the big banks responded by raising prime rates by a quarter of a percentage point to 3.70% from 3.45%.

“You can put yourself on the right side of the interest rate equation by paying off debt and increasing savings,” said Greg McBride, chief financial analyst for Bankrate.

Read: Banks raise prime rates after BoC announcement

Work

A client’s job is one of their biggest financial assets as it’s the source of their livelihood.

Unfortunately, most people pay attention to managing their career only when their job is threatened, and that is often after a period of denial, said career coach Sheryl Spanier. But taking care of your professional life proactively can pay off—financially and emotionally.

Spanier said that the people she sees who are most successful think about their career strategically—being savvy about both where they and their industry are going. They also are always marketing themselves and building their portfolio of experiences and expertise to better position themselves within that framework.

Following that script can make you indispensable when times are tougher, should layoffs or other unwelcome job changes come.

“Don’t approach this whole thing with a fear perspective,” she said. “It’s about growing, it’s about what you care about and what you are curious about. That tends to get submerged when people are under duress and trying to protect themselves against a career crash.”

Read: Why client coaching can’t be left for corrections

Housing

Homeowners should make sure, as always, that they aren’t playing too fast and loose with their cash.

Clients who own a home should make sure they have savings on hand to protect themselves if they hit a financial pothole in the future. Those feeling confident and wanting to remodel shouldn’t overextend themselves financially or invest too much in an update that won’t pay off if they have to sell.

Read: When a client’s retirement plan is selling a home