When Banks Fail: How to Secure Your Investments

David Treece, MBA, AIF®, CLTC® | Mar 19, 2023

We always plan for issues like this

We are fiduciaries, and it's just part of our fiduciary process.

If you are concerned about market losses, when we meet with you and we set up your plan, we may have put you with money managers who will go to cash in a crisis. We work with several of them and they've been doing a good job during this downturn. The goal is to stay invested. This is a temporary issue and you need to keep your eye on your long-term investment goals.

One way that we are different

We're not going to tell you just to ride it out, ride it to the bottom, this is where we are different. We work with financial products that are guaranteed.

We have CDs that are issued by major banks that are still tied to the market, you can maybe make a little bit more if the market is up. There are some that have floors or buffers where they will eat the first percent of a loss. That's also true with insurance companies that will guarantee through an annuity perhaps every dollar you put in will be guaranteed either for income or to even give you growth for retirement.

Some of these are not necessarily for retirement income, but will just be for a period of time—it's fixed—you may get an interest rate, there's no risk of loss at all, or it could be that it's also for a short period of time, I mean still a few years, but then there will be buffers they will eat the first 10% or even 25% of a loss, they will cap it on the upside. But then I'm thinking in this downturn, you're probably not giving up very much on the outs on the upside. It's the buffers on the downside that you want.

We have used these products for our clients and generally they have really paid off, they've been worth putting into the portfolio.

We're amazed our phones have not been ringing off the hook

That’s because I think we've done a good job from the beginning. An important point is to not try to fix a problem when you're in the middle of it. Be prepared beforehand. It's like having insurance before you need it. So when something does go wrong, you're covered. And that's how we've tried to plan for all of our clients.

I was doing this back during the 2008 market meltdown when the S&P 500 was down more than 50% at one time. A lot of financial advisors were saying, don't worry about it, it's long-term money, ride it out, it will come back.

This is how small investors always underperform and lose, they sell when the markets go down, they realize a loss. They don't get back in when the market goes up.

We have a better strategy for most people

We work within your risk tolerance and make sure that it doesn't go all the way down to the bottom to begin with. And if the market goes down, you've got breaks and stops as we go through. But yet you're still invested. And when the market comes back up, you're still positioned.

So there are ways to manage this risk. And this is one of the things we've done very well for our clients. So you can get some growth with some risk control.