The word “unprecedented” seems to get thrown around a lot lately. The COVID-19 pandemic is unprecedented in its global scope. The physical and economic shutdown that followed the outbreak was also unprecedented. The wildfires ravaging the U.S. West Coast are unprecedented. Many of us are left wondering—what’s next? 

At Whitnell, we are grappling with this right now in our conversations with clients. The biggest change seems to be in mindset. For a decade, the markets grew fairly consistently. But then the shutdown happened and suddenly risk felt very real again. So I’m wondering how you feel right now about risk. If you find yourself feeling more risk-averse than in the past, and you’re concerned about how this might impact your long-term prospects, you’re not alone. Here are some of my best ideas for how to think about risk right now. 



On Friday, February 14, 2020, the Dow Jones Industrial Average closed trading at 29,398. One very difficult month later, on Monday March 23, 2020, the Dow closed at 18,591. This 36% decline, for many of us, felt all too familiar, reminding us of a roller-coaster ride we’ve taken before. 

In March of 2009, the Dow hovered in the lower 7,000s after a drop from well above 13,000. This period has come to be known as the Great Recession, an event most of us hoped we’d never see again. While our current dip is not as severe as what we experienced in 2009, the feeling is what I want to focus on here, and how this feeling impacts our mindset. Volatility is back, something many of us have not dealt with in a long time

From early 2010 to early 2020, the markets rose at a fairly steady rate. Volatility and market slides faded in memory. During this period, many of the conversations we had with clients focused on how much risk they were willing to take to achieve their goals. The willingness to take risk seemed pretty high to me. The primary question people seemed to be asking themselves was this: what will I miss out on if I don’t take this risk?

That sentiment seems to have changed a fair amount over the last several months and understandably so. A decade of steady, nearly uninterrupted, growth was suddenly disrupted. Like people in a roller-coaster car going slowly up, we seem to have forgotten what can come next. Many of us gritted our teeth on the way down, wondering just how low it would go. That feeling of loss can be nauseating and hard to take. 

However, it’s not all bad news. At the time of writing this, the markets have recovered a fair amount of losses. On Wednesday, September 2, the Dow closed at 29,100. Is this the beginning of the recovery we all want to see? Is this the beginning of a new period of volatility where we could see even more ups and downs? Could we slide even further, dropping below the recent Dow low of 18,591? Maybe, most importantly, how should this recent spate of volatility impact your risk mindset? 

As I talk with clients, I find an enhanced sensitivity, an increased awareness, that investing can be quite unpredictable. Of course, we all know this, and we pay it lip service. But a fresh reminder like what we saw in March of 2020 makes it poignant. Now the question that many people seem to be asking themselves is this: what will I lose if I take this risk? For the record, I think that is a fair question. Let’s explore it a bit. 

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"I enjoy working with young professionals and helping them chart their course toward their financial future. I also enjoy working with my colleagues on the Investment Committee to create solutions for our clients."


My colleague David Peckenpaugh wrote a great article called “Risk—Friend or Enemy?” He said something in that article that I believe bears repeating:

Risk is not a bad thing. Risk is normal. Risk is the friend of a long-term investor because it provides the opportunity to earn greater returns over time.”

So, in general, risk is our friend because it is risk that allows for reward. That being said, risk is not static just like the markets are not static. Risk changes over time for people as their situation changes. Let me explain what I mean. I believe risk tolerances are driven by two primary attributes for most people: ability and willingness. 

Ability has to do with how much risk you are able to take, based on your personal situation. For most people who invest, this is a function of the money that you don’t need to live on. Ability, at its core, is about the math. We use balance sheets and financial plans to calculate a client’s ability to take risk. In general, we recommend that clients live within or beneath their means and save the rest. The savings over many years, combined with inheritances--for several clients--and growth in long-term investments, can lead to quite a sizable pool of money. 

Willingness has to do with how tolerant you are of risk. Willingness is about mindset, not math. This is about comfort levels. Some people are comfortable with risking quite a bit of money that they may not need to live on, but that they want to see grow over time. Other people find it very hard to sleep when their investments are in decline. But when the markets take a huge drop, like we’ve seen this year, I find that willingness, not ability, takes the biggest hit.  

During the volatility we’ve seen this year, ability and willingness have been in flux. For example, balance sheets are a snapshot of a moment in time. People whose net worth was in large part tied to the markets saw a temporary hit to their balance sheet. But for many long-term investors—even after the big hit—the math was still in their favor to remain in the markets. In other words, they still had the ability, but did they have the willingness?

You might think that I’m putting forward an argument to stay the course, and for some people I think that’s the right call. But what I actually want to explore with you is how your willingness to take risks has changed and why you feel that way. The reason I want to explore this topic is because willingness, more than ability, will likely determine whether or not you achieve your long-term goals



At Whitnell, we build investment portfolios to withstand the types of volatility we’ve seen in 2020. You’ve likely heard this statement before and it may feel like cold comfort right now. One of the questions we ask when clients say they want to make changes to their risk profile, is this: what has changed in your situation? If nothing has changed, doing nothing might be the best choice. But it often feels wrong to do nothing when you watch, day after day, your wealth and life savings being depleted. That’s hard. Even so, I do believe these are the right questions to ask ourselves right now. 

  • Have my long-term goals changed?
  • Has my ability to save and invest changed?
  • Has my or my loved ones’ health changed?
  • Has my retirement timeline changed (if you are not retired)?
  • Has my long-term need for income changed?
  • Has my family situation changed (including the heirs you want to support)?
  • Have my charitable goals changed?

If the answer to all these questions is no, then you have to ask yourself, what has changed? After talking with dozens of clients, what I find has changed is comfort. This is not a problem that any form of math can solve, to my knowledge. 



Many people seem to believe that financial advisors rely upon cool-headed, dispassionate and carefully calculated mathematical projections to create the strategies we recommend to clients. That is true, to some degree. But the greater truth is that this is more art than science. The math can tell us what is possible, given reasonable inputs to a model. That’s the science. But the art, now that’s a whole other ballgame.

For me, the art of what we do is the connection we have with clients and our ability to guide them through difficult times, like we’ve experienced this year. This is about listening and deeply understanding what bothers you and robs your peace of mind. This is about exploring how your feelings have changed and what, if anything, to do about it. That’s why, right now, I’m asking these kinds of questions:

  • How are you feeling?
  • How are you sleeping at night?
  • How often are you checking on your investments: once a day, week, month?
  • How worried are you about the future?
  • How has your mercy line changed?

A mercy line is the point at which you cry uncle and want to get out of the markets. I find that some people are reevaluating their mercy line. That’s completely understandable. But it’s also something you shouldn’t do alone. 



The Whitnell tagline promises connection, comfort and continuity. It was relatively easy for all of us to feel comfortable during a ten-year upward trajectory. But now, our ability to provide comfort is largely dependent on the strength of the connections we have with clients. This is why we are making it a priority to spend time with clients, listening to what concerns them, talking about their future and exploring their heightened sensitivities. 

Given the inherent discomfort that comes with volatility, this may be our best chance to provide comfort to you and your family. While it is highly likely that you’ve been in constant contact with your advisor during this time, I want you to know how important it is to us to talk to you. We take very seriously our imperative to give you comfort, no matter how the markets perform. 


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