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When the harsh reality of the pandemic hit, I took stock of my own situation. A declining portfolio was the least of my concerns. My wife and I are within the demographic of those likely to suffer serious complications if we contract COVID-19. We may not even survive.

If one of us catches it, the other is very likely to become infected.

Some of your clients may be in a similar situation. Here’s how we are dealing with it. Perhaps our experience can assist them.

Personal financial planning

There’s nothing like a pandemic coupled with a massive drop in the market to stress test your personal financial planning. How did your clients fare? How did you fare?

According to this article, some advisors found it necessary to apply for the PPP loan, which isn’t surprising. I wonder if those advisors, in hindsight, would have been more conservative about having enough cash reserves to withstand this kind of black swan event.

I’d also be interested whether this crisis causes more advisors to rethink their AUM-based fee model. You have no control over the spread of COVID-19. Why should you be penalized for things you can’t control, like bad markets, or rewarded for good ones?

I took an unconventional route, which most advisors wouldn’t condone. I have a significant amount of cash value in life insurance policies. In my asset allocation decisions, I considered this cash value as the equivalent of low-risk bonds.

When my stock portfolio took a hit, I was comforted by my cash-value reserves. It helped me stay the course emotionally.

Should you take another look at the role insurance (of all types) and single-premium immediate or deferred-income annuities play in an overall financial plan? It’s hard to quantify the peace of mind this kind of planning can provide.