How Major World Events Have Always Impacted Stock Markets

“Everyone has a plan until they get punched in the face” - Mike Tyson.

Major world events have always impacted stock markets, from a risk and return perspective. If we go back in time – say the past 100 years – we’ve had many significant market-impact events, namely:

All of these events have impacted investors who have invested in equities, especially those investing in their retirement strategy. Some, obviously, more impactful than others!

The current uncertainty may have an unreal air to it. The gyrations in all major indices, as well as the volatility that accompanied these swings, has indeed undermined investor confidence.

It is only natural for clients to feel worried, especially for those whose retirement experiences are aligned to market fluctuations. Financial advisers will no doubt have been in contact with their clients to address their questions and concerns.

The financial questions on the minds of many clients come down to this: ‘am going to be OK financially?’

Sadly, in the absence of a robust financial plan that accounts for a wide range of market conditions, such as the one we’re in, some advisers may struggle to answer this question with a high degree of confidence.

Traditional straight-line projections are incapable of answering this question. How do you know a plan would work if you haven’t stress-tested it for the current environment?

As the saying goes, these ‘financial plans are worthless’ because they are static and do not reflect the reality of ever-changing capital markets.

Timelineapp is created to cater for these situations. Our technology applies over 100 years of historical capital market data to stress test clients’ portfolios in retirement and how the portfolio will perform under a wide range of market conditions.

This means that every plan built on Timelineapp has already been tested against all the events mentioned above and more. So far, the level of decline in the capital market is well within the range of scenarios tested by Timelineapp.

That said, this is an evolving situation. As the military saying goes, no plan survives contact with the enemy. No one knows exactly how long the current bear market will last or how deep the decline will get. That’s why Timelineapp Livetrack provides automates stress-testing of the plan on an ongoing basis.

Livetrack helps financial planners and their client visualise how their retirement journey evolves. By tracking real-time portfolio balance, withdrawals and asset allocation, it provides ongoing monitoring and actionable alerts to the planner.

Livetrack helps keep your client’s retirement journey on track in three simple steps:

  1. Ongoing assessment of sustainable withdrawal and success rate
  2. Automated portfolio tracking against the client’s stated goals
  3. Actionable alerts to advisers and senior managers within the business

This constant, ongoing reassessment is what makes planning valuable.

The upshot of this is that advisers can see if their clients’ plans are still on track, based on the latest market conditions and offer reassurance to their clients accordingly. If the plan is no longer on track, Livetrack will automatically alert the adviser, to consider adjusting the plan. This means that the plan becomes a living, breathing compass in an everchanging landscape, not a lifeless document gathering dust.

Financial advisers using Timelineapp for their clients’ retirement experience, therefore, have a sound basis for communicating robust results to them and for having an honest conversation about how these historical events will impact their retirement. The adviser becomes not a map, but a guide for their client in an everchanging landscape! It’s such a beautiful thing to behold.

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Toyosi is the Pension & Technical Consultant at Timelineapp. His experience is in Financial Services and consulting (“Big-4”). Toyosi has the IMC qualification and is a member of the CFA Society of the UK and the Chartered Insurance Institute. Toyosi is one of our content contributors and is often writing articles on retirement and the sustainable withdrawal framework.

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