This Doctor Will Heal Your Portfolio

Carolyn McClanahan began her career as a physician, working in private practice and as an emergency room doctor in Richmond, Va. She switched to financial planning after she and her husband were unable to find a planner that fit their needs. She enrolled in the certified financial planning program at the University of North Florida and founded Life Planning Partners in 2004.

With news of the novel coronavirus affecting financial markets, has your phone been ringing off the hook? Actually, not at all. But we’re very proactive with clients and send out information via e-mail.

It’s not guaranteed, but when you look at history whenever there has been an epidemic—think Ebola, SARS, MERS—the market always drops, and then after things subside it goes right back up.

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What have you been telling clients? We remind them that we have them invested at the level of risk they can tolerate and want to take, and no more. Let’s say a client is retired and has 30% invested in stocks. If their stock allocation dips to 20%, we bring it back up to 30%. Same goes for a younger client who’s more heavily invested in stocks. We rebalance their portfolios in situations like this.

Does your background as a physician influence your approach with clients? Not so much on investments, but it does help shape how we do their financial planning. Part of the problem is that people spend a lot of time worrying about a future that’s unpredictable. Our main approach is to make sure people are living a happy life now. For example, if someone hates their job, we have them focus on finding a new job instead of socking away money to retire early. If they’re happier at work, they’ll work longer and be more financially secure. To me, the coronavirus is yet another wake-up call for folks to tackle fixable risks.

What do you mean by “fixable risks”? Your overall health, for one. For example, the flu kills a ton of people every year, and we have flu shots available that most people don’t get. Or say you’re a smoker, or you don’t wear a seatbelt while driving. Those are fixable risks that people don’t think about day-to-day that put them at much bigger risk than something like the coronavirus. It’s important for people to live mindfully in terms of taking care of their health.

How should people prepare financially for crises such as the coronavirus pandemic? It’s always important to have an emergency fund, especially since we’re seeing forced quarantines and school shutdowns that could reduce your income. You need to have the resources to be able to afford that.

It’s also important that you’re insured appropriately. That’s a huge one. Young people are really bad about having disability insurance. What if you get seriously ill and you’re out of work for a long time? An emergency fund is great, but you need to replace that income if you can’t work. If you have dependents, you also need life insurance. With the coronavirus, most of the people it will affect are older. But the guy who first identified it was a 31-year-old physician, and he died from it.

What advice would you give for someone who is getting started investing, given what’s been happening in the market? Don’t stop your 401(k) contributions. By consistently investing when the market is down, you are buying stocks at a lower price. If you are just starting out and don’t have a lot of money, the best way to stay diversified is to buy a target-date fund. As you get closer to needing your money, you may want to get help from a professional to determine the right allocation based on your goals.