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Scott Neal

Scott Neal, CPA, CFP, is the president of D. Scott Neal, Inc., a fee-only financial planning and investment advisory firm with offices in Lexington and Louisville. Reach him at or by calling 1.800.344.9098.

Recollections of Financial Crisis

At 5:00 AM on March 20, 2020, the DOW futures were registering an implied open to the trading day 800+ points up. The DOW ended the day down 913 points. The index had a “death cross” a term used to describe the 50-day moving average dropping below the 200-day moving average. It was the first time in over a year that had happened. It was a wild swing, among many wild swings, during the COVID-19 pandemic. The U.S. stock market had entered bear market territory (down 20+%) in 16 days.

The COVID-19 virus has presented us with a crisis unlike any our generation has witnessed. About two weeks into the crisis I saw a two-question poll which asked with which the respondent was more concerned due to the COVID-19 virus: 1) impact to health or 2) finances. 54% of the respondents said health, and 46% said finances. That was our cue.

The pandemic called to mind my early training in dealing with crises of various sorts. I recall some of my military training. Before heading into a battle, we were told to stop and pause; to take a deep breath before charging the hill. My pastoral care training taught me to “hold space” for others who are in emotional pain. Holding space means being willing to walk alongside another person, without judgement, on whatever journey they happen to be on in that moment of encounter. This was a time for us as planners to rise to the occasion. In financial planning we are taught that there are three factors that accompany anything that is stressful: uncertainty, lack of control, and unfulfilled expectations or disillusionment. To the degree they are resolved, there will be a positive outcome in resolving stress.

As the market fell during the COVID-19 crisis, we found that many of the questions posed by clients swirled around the feeling that whatever goals had been set in previous financial plans were now out the window.

“When a crisis hits, three financial planning areas rise in importance”— Scott Neal

I called one person, and upon hearing my voice, he asked, “Do I have any money left?” Of course, he did, but he imagined that it had all been lost in the market’s crash. We got lots of calls wondering if the goals for retirement that had been set months ago were still achievable. Our systems remained up and we provided answers to perplexing, sometimes complex, questions. While sequestered and practicing social distancing during the crisis, videoconferencing and screen sharing proved most beneficial.

When crisis hits, three financial planning areas rise in importance:

Cash Management

During the pandemic, cash flow dried up for many people. We already knew that this is the first area to address to help people have a greater sense of control over their situation. The importance of three to six months of liquidity was ratcheted up. In fact, if there is one thing that is more stressful than seeing the market go down, it is a threat of running out of cash reserves and having to sell assets while their price is depressed. Or worse yet, having no liquid assets that can be converted to cash. My free e-book, How to Get a Handle on Cash Flow Once and For All, can be downloaded from my blog site It shows how to set up your cash flow so that you don’t miss a paycheck. There are also sources of cash that are sometimes forgotten during periods of stress: cash value of life insurance, loans from retirement accounts, lines of credit, home equity loans, or even credit cards in extreme circumstances.

Savings and Investment

We heard two big questions related to investments throughout the pandemic. 1) Is it time to buy now that stocks are so low? Or 2) Is it time to turn everything into cash and wait this out? Two sides of the same “uncertainty” coin. Both questions illustrated the human tendency, during a crisis, to focus on the near term and the disregard of the long term. We respect that tendency but maintain a long view throughout our work with clients. We not only focus on the financial impact of what has happened, but also the financial impact of what might happen.

Insurance and Benefits

Watching the news each day tally the number of deaths brought on by the virus was unnerving for a lot of people. For some, it served as an alarm to make sure that their life and disability insurance was up to date. Simply gaining an understanding of employee benefits and a clear assessment of the coverage offered a greater sense of control in the face of the pandemic’s uncertainty. It is vital to know, if a health event hits home, what cash flows can be expected and what is their source? How does one access the coverage / benefit? Is there a waiting period before benefits can be collected?

Hopefully, by now you see where this is going. Having a financial plan before the crisis hits doesn’t take away the crisis, but it certainly reduces much of the uncertainty about how life might be after the crisis is resolved. Updating the plan while in crisis may not be high on your list, but having direction sure can alleviate a lot of stress.

Scott Neal is president of D. Scott Neal, Inc. a fee-only financial planning and investment advisory firm with offices in Lexington and Louisville. Call him at 1-800-344-9098 with questions.