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When turbulence hits, fly the airplane first

Nicholas Brown, CFA, CFP®

How do you know when there’s a pilot at a party?

Don’t worry – they’ll tell you.

Some (ok, most) of our clients may know that I was a pilot in a previous life. A significant part of pilot training revolves around handling emergencies: what actions to take, in what order, and how to make the right decisions every time. Checklists and procedures are memorized until they are second nature.

Through all that training, there is one simple saying that a flight instructor taught me, which has stuck with me for the past 20 years:

Fly the airplane first.

Put another way, it is better to take a few extra seconds to collect your thoughts and figure out what controls to focus on, than to hit a mountain dead ahead because something else was distracting you. Keep the most important thing as the most important thing.

During times of crisis, our initial response is to “do something.” We feel better when we are actively responding to the crisis we are surrounded by because it keeps us busy. But those responses can sometimes have long-term detrimental impacts if we forget to fly the airplane first.

There is a lot of turbulence in the financial markets, driven by the very real economic impacts the COVID-19 virus is having on the global economy. The initial reaction for many equity investors is to get out as fast as they can. That reaction is compounded each volatile day that the equity markets bounce around. Some of those investors are forgetting to fly the airplane first.

As we (remotely) work together through this latest crisis, it is important for us to remember the role that equities play in a portfolio. They are there for long-term growth, not short-term withdrawal needs. While it is never fun to watch the value of our portfolios go down, a well-constructed portfolio should still meet an investor’s needs regardless of short-term equity movement.

For those investors whose needs may have changed as a result of the past few weeks, now is a great time to engage with your financial advisor. They are your copilot during times like this. Share the workload. And, give yourself the opportunity to take a few deep breaths. Together, you can develop a better analysis of your situation. And the best plan to fly the plane safely home.

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