Learning lessons in tough market environments

Tyler Mordy discusses the current cycle and tells us why advisors have been forced to rethink their value proposition

Learning lessons in tough market environments
Some investors are worried that we appear to be nine years into a bull market. However, in reality, this is not a regular business cycle: it’s a post financial crisis cycle. Due to the financial healing and deleveraging that is usually needed, post-crash cycles usually take longer to get going.

As a result, the extended bull run that’s been seen in the US, and to a lesser extent Canada, is only just getting started in other parts of the world.

“This year we’re seeing other countries enter this globally synchronized upturn, with Europe showing stronger GDP growth than the US,” says Tyler Mordy, President & CIO at Forstrong Global. “Earnings are turning up, credit is expanding again, and unemployment is falling – all of the things you would want to see in an economic rebound.”

Mordy believes that attempting to call the end of a bull market can be dangerous. Instead of trying to pinpoint exactly when the market will change, he encourages investors to focus on building the right structure to withstand the next bear market.

The shock waves of the financial crisis of 2008 are still being felt in certain sectors and economies today. Yet, despite the damage caused, Mordy was able to take some positives from what was a challenging time.

“It was a time in which a lot of financial services professionals were forced to be introspective and think about what their value proposition was and could be in the future,” Mordy say. “The financial crisis drew a line between money management and financial planning, and of course the two are symbiotic. As I went through the 2008 crisis, I developed a deep personal conviction around the value of having an advisor.”

In recent years, Mordy has seen more and more advisors realize the value of becoming the ‘financial quarterback’ or ‘family CFO’ for their clients. Increasing numbers of advisors are recognizing that their value proposition may not necessarily lie in selecting securities and asset classes – in many cases it’s about being able to bring in the right specialist to address each challenge or opportunity.

“Perhaps the most important thing for advisors is the behavioural coaching aspect; making sure clients are sticking to their plans and not letting emotion creep into the process,” Mordy says. “If an advisor can do that well and then partner with a money manager that’s good with downside protection, that is a powerful combination.”

“That’s how I think you win in this business. And it takes an advisor to coordinate all of those activities.”

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