Here’s what financial advisors say about the Fed’s latest rate hike

The Marriner S. Eccles Federal Reserve Board Building in Washington, D.C.

Sarah Silbiger | Reuters

While the market moves are positive for investors, they are still dealing with a complicated backdrop that’s likely to continue to whiplash asset prices going forward. Earlier in the week, the S&P 500 fell into bear market territory, meaning a drop of 20% from its most recent high.

And, while the Fed is working to combat inflation, there’s still a lot of economic uncertainty ahead. That can lead to a lot of stress for investors, even ones that with long-term time horizons.

“We are certainly not immune to this,” said certified financial planner Brad Klontz, author of “Mind Over Money” and co-founder of the Financial Psychology Institute. He was speaking at the CNBC Financial Advisor Summit.

Manage investing stress

Instead of getting stuck worrying about the recent market moves, Klontz suggests looking at performance over a much longer period of time to help ease nerves.

“When we become emotionally charged, we become rationally challenged,” said Klontz, adding that when this happens, people make what can be costly mistakes with their money. “We have to be able to calm ourselves by widening out that frame of reference to see things more clearly.”

Dan Egan, vice president of behavioral finance and investing at Betterment, agreed, noting that keeping an eye towards future goals can also help investors cope with stress in volatile markets.

“That focus on the future is very powerful,” he said at the summit.

To be sure, while the actions of the Fed are important, financial advisors and investors shouldn’t be making any decisions with their money solely around the central bank, said summit participant Douglas Boneparth, CFP and president of Bone Fide Wealth in New York.

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“If you’re building financial plans strictly around what the Fed is saying, I’m not sure you’re building solid financial plans,” he said, adding that financial advisors need to make sure their clients understand the bigger picture.

“It always comes down to helping people understand what they can’t control versus what they can,” he said.

Still, if you’re seeing your portfolio decline and it’s keeping you up at night, it may be time to rebalance your portfolio, according to Stacy Francis, CFP, president and CEO of Francis Financial in New York, and also a summit attendee.

“We need to put a new pair of glasses on and look at that portfolio and make sure that the risk that’s in it is appropriate,” she said.

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