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‘Every month, I express my concerns to my advisor, but he says don’t worry.’ My 401(k) has lost more than 20% and I can’t lose that kind of money. Time to find a new advisor?

Every month, I express my concerns to my advisor, but he says don’t worry and it will come back.

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Question: My 401(k) was working fine for a while, but since January of this year it has lost money that I can no longer afford to lose. I want to retire in a year and my 401(k) has lost more than 20% and is not so big from the beginning. Every month, I express my concerns to my advisor, but he says don’t worry and it will come back. I don’t see that happening anytime soon. What should I do? (Looking for a financial advisor? You can use this tool in conjunction with a financial advisor who can meet your needs here.)

Answer: All in all, a 20% loss for a retiree in a year suggests the account may be overinvested, said Daniel P. Forbes of Forbes Financial Planning, said certified financial planner Grace Yung of Midtown Financial points out that this is a midterm election year and that historically, midterm election years have been volatile due to uncertainty. “We have many other factors contributing to the current market action such as high inflation, rising interest rates and geopolitical uncertainty,” said Yung.

Have questions about dealing with your financial planner or are looking to hire someone new? Email Pick@marketwatch.com.

So do you need a new financial advisor (?you can use this tool in conjunction with an advisor who can meet your needs)? Thuan says it depends. The first thing is to have a serious conversation with your current advisor because it sounds like your portfolio might be too aggressive for you to be willing to weather the ups and downs of the market. “Instead of hoping for a recovery, clients and advisors should review their risk analysis and earnings projections in retirement to make sure all is on track,” Forbes said. And John Piershale, certified financial planner at John Piershale Wealth Management, says: “Ask your advisor to assess your portfolio risk relative to your risk tolerance and then make any adjustments.”

For his part, Ian Rea, certified financial planner at Slate Peak Financial Services, says: “If you’re really uncomfortable with volatility in your portfolio, have a frank talk. about it with your advisor. You have options other than just selling everything and incurring a permanent loss. Ask your advisor to shift your portfolio to a somewhat more conservative approach,” says Rea. That said, that could mean locking in some losses for now.

One thing an advisor can do somewhat right, experts say, is to ask you to keep going. Indeed, Rea says it’s important to keep in mind that you haven’t actually lost 20% yet. “That only happens if you make a sale. In the meantime, it’s just a decline in value, which can happen cyclically, even for the best portfolios,” says Rea. And for his part, Elliot Dole, certified financial planner at Buckingham Strategic Wealth, says that no one likes to see their portfolio shrink, but fear-based selling can be devastating. real financial loss. “Selling ‘get me out’ can feel good in the short term, but when the market recovers and you’re on the sidelines, you’re faced with another tough decision to make is when to get out,” Dole said. come back, now at a higher price,” Dole said.

But there is a slight danger that your advisor may not have invested your money in a way that suits your risk tolerance: That is something they should determine before investing money. And the advisor should also share the market’s expectations with you. “A financial planner needs to set realistic expectations in up and down markets and listen to the client’s needs and risk tolerance. In this example, the client seems to become stressed and uncomfortable and this can lead to a bad relationship,” said certified financial planner Andrew Feldman of AJ Feldman Financial. (You can use this tool in conjunction with an advisor who can meet your needs.)

The advice, recommendations or ratings presented in this article are those of MarketWatch Picks and have not been reviewed or endorsed by our trading partners.

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