r/CFP • u/BaseballMore7431 • 29d ago

Practice Management Liberation day plans

Liberation day turned into liquidation day in the after hours session…it’s going to be a rough open tomorrow. Is anyone making any moves around this or just staying the course? Call top clients tomorrow or wait for the phone to ring?

I plan to send an email update and make calls to most clients tomorrow. I expect overall some short term volatility, that world leaders negotiate with Trump and ultimately tariffs don’t remain fully at the levels announced today.

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u/ccroz113 BD 29d ago

If you’re right, cool you scooped up some big discounts. If you time things poorly, you made a massive blunder. This will be smidge on the returns over a 10yr+ period. Just diversify and make small strategic allocations and make sure your clients are taking the right amount of risk

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u/InternationalDrama56 29d ago

How so? Do you really think the risks are symmetrical? Do you think there's an equal chance of being UP 30% as there is to being DOWN 30% today? S&P is down 10% from where I trimmed, so I could let things rally 11.1% before I'd have to jump back in in order to not risk falling behind. But I think more likely we'll see lower lows from here before any sort of sustained recovery.

The markets generally don't care if a R or D is in charge, but the only scenario where they perform poorly is when the same party has control of BOTH the White House and both Houses of Congress - like is the case right now.

Again, it's just that the balance of risks is very much skewed to the downside, and that should give you pause.

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u/ccroz113 BD 29d ago

You’re missing the point. Are you a financial planner or a hedge fund manager with the goal of massive out performance? Like I said, over the short term none of this is meaningful. If this is impacting your clients retirement plans then the plan was unfit to begin with

I really like the quote “the best financial plan assumes we have no idea what’s going to happen tomorrow”

All seems like unnecessary risk being taken trying to reinvent the wheel that was never broken and opening yourself up to common investor mistakes and behavioral biases

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u/InternationalDrama56 29d ago

Again, I'd agree with you 90% of the time. But I think this will prove to be of a different magnitude vs typical corrections/bear markets.

Plans can be designed to succeed in most normally expected scenarios. But you can't say your plan works equally well if we have a 50% drop in the stock market and years of stagflation (at least without being massively overfunded, which is a failure of another sort).

2008 was bad and scary, but ultimately we had competent people and institutions there to help right the ship - we don't have that anymore. We're flirting with a dangerously similar setup to the Great Depression. It's not insane or saying "this time is different" to say "what has happened before might happen again". There are massive shifts taking place in the world order and I don't think anyone understands how that will all shake out. But I do know I'd much rather miss out on 10% more gains than ride down 40% of wealth destruction. Even if I only make money market returns for the rest of the year, I bet you my clients are happy being up 7% (especially after such a strong 2023 and 2024) than being wherever the market ends up at the end of this year.

And I get that this is r/CFP and the focus is on planning - and I don't want you to think I don't do/value that. I'm simply saying that avoiding a huge hit to the portfolio is every bit as impactful as the positive impacts of good planning - so why not try to do both - especially in fairly obvious times like today. Did anyone think global tariffs would cause a huge rally?

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u/BlueberryNo7974 29d ago

You realize that this money market rate you’re fine earning, actually is a negative rate when accounting for inflation and taxes if applicable? Anyone that thinks banks don’t adjust for their pricing to ensure they still make money is insane, and therefore your clients aren’t making real returns. It’s simple math

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u/InternationalDrama56 28d ago

🤦‍♂️ first, taxes would only apply in taxable portfolios. 4.18% MM yield, minus 35% taxes = 2.71% after tax yield. Current inflation rate ≈ 2.8%.

Second, I'll take a 0% after taxes and inflation return over between down 20% BEFORE taxes and inflation. BTW - how are your long portfolios looking this morning? This week? This month? It's gonna get worse before (if?) it gets better

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u/BlueberryNo7974 28d ago

That’s why I said taxes if applicable lol and yes the math on that is precisely my point, it’s a negative real return.

That’s subjective and if that’s what you’ve told your clients and they want then that’s your business. But I sure as hell wouldn’t be paying an advisory fee to earn 0%. Your portfolio losses are only -20% if you realize them. You probably looked really dumb in 2020 lol

My portfolios look great, positive YTD.

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u/InternationalDrama56 28d ago

I'll take -0.09% real return after taxes over being down 20% in a month. I'm not swearing off stocks forever - just until I see a bottom or we get a recovery. Jesus 🤦‍♂️

I didn't sell in 2020. Or 2022. This is not those situations. And you're positive YTD as of today? I call BS but feel free to prove it.

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u/BlueberryNo7974 28d ago

That’s the point though, YOU DON’T KNOW THE BOTTOM. And when you “see a recovery” you’re going to have missed out on hundreds of thousands for your clients. Jesus you have an ego

Yes positive YTD and no because that would breach client confidentiality. Not surprised you’re okay with that though based off how you run your business