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BUSINESS Monday 15 June 2020
Insider Q&A: Ric Edelman on managing money in a crisis

By STAN CHOE nity as 2008 was. If they're
AP Business Writer making a mistake, they're
NEW YORK (AP) — Ric Edel- being too aggressive rather
man, founder of financial- than too conservative.
advisory firm Edelman Q: What about someone
Financial Engines, has who isn't fortunate enough
helped clients navigate to have money to invest,
several downturns over who has no money coming
the decades, and in some in?
ways this one is just like any A: If you are in financial
other. jeopardy right now and
But this crisis is increasing lost your income and are
the urgency for some dis- struggling to pay your bills,
cussions that weren't as the only bills you should be
big priorities in past bear paying right now are for
markets, he said in a recent food and medicine. For-
conversation with The As- get about car payments,
sociated Press. His firm's cli- student-loan payments. All
ents have over $200 billion that can wait.q
in assets under its manage-
ment.
The conversation has been
edited for clarity and brev-
ity.
Q: Have your clients been
more scared about this
downturn than others?
A: From a financial per- In this March 2020 photo provided by Edelman Financial Engines, Ric Edelman poses in his office
spective, this downturn is in Fairfax, Virginia.
like other downturns, and Associated Press
our clients have been
through many of them. vested the way they were. eficiaries, obtaining powers advice for that? People
They know that in the long That served them very well of attorney and medical di- should give only loans, or
run, markets recover and in the early days of this cri- rectives to make sure their only gifts?
ultimately reach new highs sis. wishes are in fact carried A: That is the first choice: Is
and therefore require three But as the crisis has contin- out, because we're discov- it a loan or a gift? For gift
things: a diversified portfo- ued, and we are now rec- ering this virus is killing peo- purposes, the IRS has limi-
lio, a long-term time horizon ognizing that this crisis is go- ple indiscriminately. tations, but for practical is-
and the fortitude and emo- ing to last a couple years, Q: Do you find resistance sues, they don't really exist.
tional capacity to hang not a couple months, it is in- from clients in talking about Don't worry about the gift
in there when it gets very creasing the levels of con- their own mortality? tax.
dark. versation with our clients A: We've always engaged The bigger issue is that you
With those three in mind, who want to confirm they in estate planning with our probably think that you're
clients realize that this too are indeed able to hang clients. I would say that lending money to your
shall pass. There was much in there for as long as this COVID-19 is creating a new brother-in-law, and he
greater fear in '87 and af- lasts. urgency. probably thinks you're mak-
ter 9/11 and the dot-com Q: What does that mean? There's also a related con- ing him a gift. So you really
bubble than there is today. A: It means confirming versation: It's easy for an have to have open com-
They went through them, they do indeed have two affluent individual who has munication as to what's ex-
and they got through it OK. years of spending in cash plenty of money to be rel- pected.
Q: So your advice is the reserves. If they don't, then atively cavalier. What we Q: Any other considerations
same as in past crises? we need to raise their cash. are reminding our clients, people may not consider
A: There is another element We also need to evaluate who tend to be well-off, is until too late?
to this crisis that the others the safety and stability of that their adult children in A: If you do lend money to
did not have, which is the their job. If there is a risk their 20s, 30s and 40s may child No. 1, will children 2, 3
health care element. That that they will suffer an in- not be as financially well- and 4 be upset they didn't
is causing a level of con- come loss, then we need off. get financial support? And
cern that would not exist if to reevaluate their portfo- They may be experienc- what happens if you gen-
this was merely a "financial lios' ability to replace that ing their own job loss, their erously support child 1, and
crisis." income. own health crises, marital you get a request from
Q: If we can wait before Q: On the health side, the issues, drug and alcohol child 2 and you don't have
discussing health care, it pandemic means you're dependencies. They're also the ability to do so?
sounds like your clients talking much more about dealing with their own ag- Q: What have you been
weren't panic selling when wills, do-not-resuscitate or- ing parents, who may be in seeing from your younger
stocks were tanking? ders and such? more precarious financial clients?
A: Our clients were gener- A: We have been provid- situations, and their siblings. A: Younger people are re-
ally not reacting with panic ing substantial amounts of We tend to focus on our ally confident in their fu-
because they were proper- advice about end-of-life own household and don't ture. Their attitude is: I have
ly positioned going into this planning, which is really es- realize until we get the decades to wait this out,
crisis, and they had the ed- tate planning. We've been phone call that they need and they are investing far
ucation and knowledge of talking about revising wills help. more aggressively, believ-
knowing why they were in- and trusts, updating ben- Q: Do you have blanket ing this is a huge opportu-