Many average sized clients are still struggling with their finances and trying to deal with a smaller paycheck or temporary loss of income. Financial advisors are trying to help their clients by liquidating some investments to make it through to the New Year. Clients are thinking less and less about how much they need to save for retirement and more about how to survive the present.
Advisors have also been helping some clients borrow from their investments to free up some cash. This is not recommended for most because it will only cause a vicious cycle that could cost them their entire investment portfolio.
When looking at what to liquidate in client portfolios, you must consider where the most gains and losses are and whether or not to rebalance the portfolio. You always must consider the capital gains taxes they will incur as well. It won’t help your client if they have to pay these taxes in April.