HCR Wealth Advisors Coronavirus 2.0

HCR Wealth Advisors and Preparing for Coronavirus 2.0: Lessons Learned

If anyone says they know if we’ll have a second round of coronavirus, they are not being honest.

States are opening up, and more people are interacting. Beaches, weekend outings, family get-togethers, protests, and events are all straining the concept of social distancing. And expanded testing gives us higher counts and a better insight into the spread of the virus.

Dr. Anthony Fauci, NIAID director and leading infectious disease expert, declared in early June that a second wave of coronavirus is “possible, but not inevitable.” However, his optimism is conditional. It requires people to follow the guidelines set forth by the health officials, as well as more extensive testing and contact tracing to take early control of any outbreaks.

Older populations still seem to be taking the virus seriously, but younger populations, less so. And, because of the incubation period and lag-time between infection, hospitalization, and loss of life, experts will look carefully in a few more weeks to see the impact of the state reopenings and events that began in early June.

Meanwhile, several groups are planning and preparing, ‘just in case.’

Planning by corporations

Advisory firms such as HCR Wealth Advisors watched as businesses faced down the initial wave of coronavirus and implemented whatever cost reductions they could. Chief financial officers are now focused on rebuilding revenue in reopening markets, and on reshaping the business – revising operations, products, and services as permitted.

PwC, an assurance, tax, and consulting services group, conducted its sixth COVID-19 CFO Pulse Survey of the nation’s CFOs on June 8-11, 2020. The general message is that “they are shifting their focus to how they can create sustainable business models that can adapt to the new realities of working and doing business in a challenging era of unpredictability.”

Among the CFOs questioned, 59% are concerned about a second wave of coronavirus infections, and 56% fear the impact of a global economic downturn. But if that happens, a level of confidence comes from having a better grasp of the broad-ranging impact of a pandemic on individual businesses: 73% indicated being very confident of their ability to provide clear response and shutdown protocols.

Planning by food and supplies companies

As the first wave of coronavirus became evident, food and supplies manufacturers, producers, and distributors saw various forms of disruption at all levels of the market. Companies large and small suffered a ripple effect throughout the supply chain. Where high demand stripped all efforts to raise supply levels, some products took longer than others to normalize.

Empty shelves

But even as some normalcy has returned to the retail environment, requirements such as social distancing and maximum store occupancy have meant much of the business has moved out of the stores themselves and into online orders, store pick-up zones, and home delivery.

Should a second wave of coronavirus appear, lessons have been learned. Producers have had to invent ‘workarounds’ to adapt packaging and delivery from commercial accounts to individuals. Ingredient levels and alternative suppliers have been increased to avoid shortages. Their response should be more agile the second time around.

Planning by the government

HCR Wealth Advisors is one of many firms watching the federal government do a push-and-pull routine. White House trade advisor Peter Navarro says the administration is stockpiling in anticipation of a possible problem in the fall. “You prepare – you prepare for what can possibly happen. I’m not saying it’s going to happen, but of course, you prepare.

Other parts of the government downplay the possibility of a severe second wave of coronavirus. Their concern is that markets continue to open and that the economy continues to rebound. But Navarro’s statement is likely right: “We are doing everything we can beneath the surface, working as hard as we possibly can.” That would be the smart thing to do.

Planning by you: so, what should you be doing?

When it first became evident that coronavirus would be a problem, some people seemed to know in advance what food and other supplies to stockpile. But, unless you live in hurricane country, you were probably surprised by what you didn’t think to do.

While the experience is still fresh in your mind, review what you were glad you had and what you missed. Put together a list of things it makes sense to stock up on – without hoarding – that will bring you peace of mind. Focus on items that you’ll use anyway – like shelf-stable foods, medicines, bottled water, and paper products. And rotate them by using and replacing them as you go.

We are about four months into the coronavirus crisis and many lessons have been learned. The government has passed the CARES Act with stimulus checks, expanded unemployment benefits, and loans for businesses large and small, and some jobs have returned. HCR Wealth Advisors suggests you look at what’s returned for you.

The conversation about another possible round of coronavirus is getting louder. Nobody knows ‘if’ or ‘when.’ The best we can do is prepare for the unknown. So, what does that look like?

Revisit what’s left of your emergency fund

Whatever you had set aside for an emergency before, four months into the pandemic, it could be bordering on empty. Financial experts have always encouraged people to start with an emergency fund of $1,000 to cover unexpected events.

The next step is to expand the fund to cover 3-6 months of actual expenses. Unless you made it through Coronavirus 1.0 unscathed, with no change or loss in income, you’ve likely had to focus more closely on what you truly need to cover each month.

The next few months should be dedicated to replenishing (or initiating) that more robust emergency fund. And a financial advisor such as HCR Wealth Advisors will suggest you hold those funds in readily available cash.

If your income is irregular, you might want to have more than 3-6 months of expenses. But if that doesn’t feel attainable, it doesn’t matter. Whatever you can set aside will be there if we indeed face a second disruption to the economy.

Take a look at your wants and needs, to see if they’ve changed

As the first wave of coronavirus infections started to appear, the economy was in full swing, and consumption was the name of the game. But forced business closures affected not only our sources of income but also the ease of making big-ticket purchases.

Coronavirus 2.0

With four months of home-bound living experience, your needs and wants may have changed. How you respond to them will depend on whether the pandemic affected you financially or not. You may feel you want a larger place, with room for a home office and with a patch of green grass. Or maybe you want a tiny bolt-hole where you can live quietly and safely, and without the financial pressure you have now.

This is a time for clarity. A team like the one at HCR Wealth Advisors can assess how such changes might affect your retirement wishes and dreams. Awareness of those wants and needs will help prepare and guide you should we see a second wave of coronavirus.

Review your various insurances

As you were wiling away the hours at home, did your mind ever go to whether you were correctly insured in one area or another? Is your family adequately protected by your life insurance? Is your health insurance sufficient? Have you explored long-term care insurance to see if it’s something you may someday be glad you have?

Or are you over-insured? Computer apps abound to help you compare quotes from insurers. You might find a better-priced auto insurer. Or maybe there’s a benefit to bundling your homeowners and car insurance.

The calm before the (possible) storm could be a perfect assessment time. And if the storm never comes, you’ll have the right policies anyway.

Reassess your financial and retirement plans

In the last four months, your portfolio went on a rollercoaster ride. If you held on, you should be somewhere near where you were in March. What about sitting down with a financial advisor like HCR Wealth Advisors to assess if your portfolio reflects your new reality? And if it should be adjusted for future market risk?

The CARES Act brought you some opportunities with 401(k), IRA, and Required Minimum Distribution (RMD) withdrawals. Is there some strategic advantage available to you there? Or is this the time to make Roth conversions because your tax bracket is unusually low? HCR Wealth Advisors can help you answer those questions.

Is there any risk of unstable income in your future? If so, should you secure a home-equity line of credit to ensure that you can leave your retirement accounts untouched? Or do you have excess cash that you’re saving (thanks to stay-at-home orders) that you could use to retire some burdensome debt? And, in this low-interest environment, can you lower your monthly budget by refinancing your mortgage or student loans – or maybe find a 0% balance credit card – to lessen the interest you pay?

What if Coronavirus 2.0 preparations could strengthen your financial position?

Sometimes we can make silk purses out of sows’ ears. Preparing for Coronavirus 2.0 – whether it ever arrives or not – can give you that opportunity. Go ahead and take it. And if we can help, let us know.

About HCR Wealth Advisors

HCR Wealth Advisors logo

HCR Wealth Advisors understands that your life is a collection of important moments. The coronavirus crisis is one of those moments – and the possibility of Coronavirus 2.0 is another. Being prepared and making critical financial decisions will affect how you weather the expanded pandemic, should it occur. And at these times, HCR Wealth Advisors is at its best.

This article is provided for informational purposes only and should not be interpreted as investment advice. HCR Wealth Advisors is not affiliated with this website.

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