I saw the movie “Sully” this weekend. It was good, not great. But it walks you through a very important historical event. If you don’t recall the plotline, this is the story of the US Airways Flight that landed in the Hudson River in 2009. Captain Sullenberger had to make split second decisions, deciding between turning back to LaGuardia, trying to make it to Teterboro airport, or do the unthinkable- a water landing.
What amazed everyone at the time was how calm the pilots were. There was no screaming (at least from the pilots or crew). There was no arguing. The crew had procedures in place and had trained relentlessly for disasters. And the most important thing they had was- trust. They trusted in each other’s judgement and that each person on the team would do what they needed to do to safely land the plane.
As I reflected on the movie, it made me realize that a good financial planner has to be like Captain Sully. Calm under pressure. Anyone can manage money and finances when everything is good. But how they handle things when the unexpected happen: market corrections, job loss, divorce, and other emergencies is the most important. Does the advisor have plans in place for emergencies? Have they ever been through a crisis before? Just like pilots who use simulators to practice all sorts of emergencies, it can help you prepare to a certain degree but actually surviving one is totally different. The human element comes in.
So how did your advisor handle the financial crisis, which coincidentally was happening at the same time as the Hudson River water landing? Markets were crashing, major financial institutions were on the brink of insolvency and the last thing New York City needed was a plane crash in the heart of it. Did your advisor at least try to help you make a soft landing? Many advisors hid and stopped answering calls, avoiding clients. Some just became order takers, allowing their clients to bail out of the market, even when it didn’t make sense. Those advisors let panic set in.
I remember how difficult it was to remain calm. No one had lived through a period like this since the depression. But having some fundamental procedures in place helped professionals guide their clients through the storm. Here are a few that can help you:
Have an emergency plan- what happens if you lose your job or main source of income? How long will it take you to replace that income? Do you have savings in place or a line of credit?
Have a “Crap hits the fan plan” (I use another word but this is family friendly publication) and what I mean by that is, what investment gets liquidated first in the time of crisis. I always show my clients which asset we would use first, second, and last. I want them to understand ahead of time where they would get money because that last thing I want them to do, is sell something they don’t want to sell at the wrong time because it could cost them in not only investment loss but tax implications.
Have your portfolio stressed tested. Your advisor can show you back testing, allowing a simulation of how your portfolio might behave under bad conditions.
Emergency plans are just that, plans. Hopefully they never have to be used. Hundreds of flights take off daily and land safely every day in America. But it is good to know that there are Sully’s out there at the helm just in case! Make sure you have a Sully at the helm of your financial life too.
Diane Young is the President of The Athena Financial Group located in downtown Rochester, Michigan. Financial Planning and advisory services offered through Athena Advisory Services.