If you’ve been increasingly anxious watching the markets, economy, and current geopolitical landscape, you’re not “overreacting.” Whether it’s tariffs, inflation, or sweeping changes to domestic and international policy, a lot is happening—and yes, much of it could impact your finances.

In a world of faster and, often, dramatically televised change, it’s natural to be concerned about what it all means and, most importantly, what it all means for you. We at Cerity Partners believe that quality wealth and investment management necessitate keeping a keen eye on the potential positive and negative impacts of change. (We encourage you to watch our Monthly Economic and Market Outlook videos and read What’s on Our Mind This Week to catch up with our latest thinking.) However, there’s a critical difference between useful attention and pointless anxiety, which boils down to one realization: Change is rarely just “positive” or “negative.” Instead, it manifests as threats and opportunities.     

A More Constructive Framework

Here are four suggestions for thinking and acting in this current environment. Several of these techniques are timeless methods for becoming an astute steward of your wealth and portfolio, but all of them will help restore your sense of agency:

Talk to your advisor.

If you’re concerned, talk to us. As your advisors, we can share our take on market, economic, and geopolitical strengths, weaknesses, opportunities, and threats as they pertain to your finances—performing what is frequently referred to as a SWOT analysis. The good news is the financial industry is quite astute at monitoring key indicators and conditions, and we at Cerity Partners have a superb team dedicated to this task. We also have more than 240 partners with extensive experience and specialization. Collectively, we draw on that brain trust to inform our assessments.

Get the big picture.

One of the keys to understanding a current event is to view it in context. Your advisor can help you determine whether what you’re witnessing falls in a normal range of expected uncertainty and impact.

We have a process for determining whether the news of the day lives in that normal bell-shaped curve or if a “black swan” event is brewing that few, if any, see. In terms of market impacts, we ask, “Are we in a secular or cyclical bull or bear market?” We also ask, “Could any current events trigger a domino effect that leads to a crisis, like the Great Recession of 2008?” This brings us to look at stress tests conducted by the banking system and Fed to measure the nation’s—and the world’s — ability to handle more extreme economic events.

Depending on how we think conditions are trending, we might want to make some tactical asset allocation adjustments to your portfolio, whether that’s to make it more resistant to perceived and actual threats or opportunistic to take advantage of emerging opportunities. At Cerity Partners, we discuss these topics in internal weekly market review meetings and with our clients.

Be SAFE.

While monitoring external conditions is prudent, it is just as important, if not more, to regularly assess your own finances with your advisor. The acronym SAFE is a handy way of describing pressure-testing your finances by characterizing their Strength, Agility, Flexibility, and Endurance:

  • Strength: There are numerous ways to define financial strength, but we might consider the amount of your liquid reserves relative to your monthly spending level, the amount of assets in large cap equities (especially those with strong financials/wide moats themselves), the amount in investment-grade fixed income securities, and your overall debt to equity ratio.
  • Agility: How quickly and easily can you react to changing conditions with strategic or tactical trading and portfolio rebalancing transactions?
  • Flexibility: This is a measure of your portfolio resilience and balance sheet. In other words, the ability to weather a variety of financial stresses, even multiple stresses, all at once.
  • Endurance: Endurance is essentially the summation of the above characteristics. When viewed cumulatively, how do your finances respond to stress, both in the short and long term? How long would they last in a worst-case scenario?

Once you understand these attributes, you and your advisor can determine where confidence is due and pinpoint action where action might make your personal finances stronger and more resilient. Here at Cerity Partners, our financial planning tools and processes can go a long way in optimizing this process and giving you real-time clarity on where you stand.

Think long-term.

If you’re anxious, it’s doubtful that you’re the only one, which means that sentiment is already factored into the markets and economic developments. That’s why savvy wealth management and investment strategies typically take a long-term view. But how can you take your eyes off the short term when so much is happening and a lot is at stake? One way is to build and maintain a strong balance sheet and cash flow, a resilient portfolio, and an above-average level of cash reserves. That combination will provide you with a cushion to ride out rough patches and resources available to invest when markets overreact to a perceived or real event. This is sound financial planning and opportunistic investment management working to put market anxiety in your favor. As Warren Buffet advises, “Be fearful when others are greedy, and be greedy only when others are fearful.”  

No matter what’s going on or what you think might happen, the best plan is to have the right people, systems, structures, and technologies serving your interests. On this note, if you are a client, we are honored to serve you, and if you are not a client, we’d be honored to put our capabilities to work for you.

Please read important disclosures here.