By John Frederich, CFP®, CIMA®, CPWA®
Editor’s Note:
While reflecting upon possible communications for bolstering morale and engagement during the current Covid-19 crisis, I received the following email that a long-term client John Frederich had sent to his team and clients and decided that I could provide no better example to readers of this column. He provided permission to reprint his eloquent message here. John is the senior partner and owner at Frederich Family Wealth Advisors, in Pasadena. Some of the facts have changed over the past few days, but not in any ways that dilute that message. I hope that you will find his words as uplifting and as inspired as I do and that you feel free to pass them on.–Tony Mulkern
Hi All,
We wanted to let you know that Frederich Family Wealth Advisors is fully functional. The team is working hard to take care of you and we remain vigilant “on the bridge.” Our employee that we were afraid was infected with COVID-19 test came back negative (after 15 days ☹!) and has fully recovered. We are being careful, primarily working remotely, (though Cynthia and I are working in the office, 30 feet apart and never in the same air space with lots of hand sanitizer in use) but synchronized with web meetings every morning and constant communication. This is working well!
So, where is the hope? As I mentioned in the last email, “our security only comes from within and ultimately from above.” That being said, where is the hope when there were 1,000 COVID-19 cases in the United States on March 10th and over 215,000 cases on April 1st? When over 1,000 people died of the virus on that same day. There was no traffic on the 210 freeway this morning and no one has driven by the office on Marengo in over 30 seconds. It’s too quiet! The economic impact is obvious. Weekly unemployment claims doubled today (April 2, 2020) to 6.6 million after setting a record of over 3 million last week. I drive down Foothill and most of the shops are closed. This is real life and real people. Where is the hope?
Well, I see a lot of it. It is continuing to look more and more like WWII. If you pull out your history books, you will see that when war broke out in Europe and Asia, we didn’t want to get involved. Isolationism reigned for TWO YEARS! It was “their problem,” and we didn’t want to get involved in another “European mess.” We had our own problems trying to recover from the Great Depression.
Then came Pearl Harbor. Thinking ourselves “safe” and separate, we were completely unprepared. The attack crippled or destroyed nearly 20 American ships and 300 airplanes. Dry docks and airfields were destroyed. Worse, 2,403 sailors, soldiers and civilians were killed and another 1,000 wounded. Basically, we had our tails handed to us and it was devastating. However, as all of us witnessed after 9/11, when the U.S. is attacked, we don’t just “take it,” we pull together and change the world.
I am sure you have heard about the “Coronavirus Aid, Relief, and Economic Security Act (CARES Act). At 2.2 TRILLION dollars, this is the largest government aid package in American history. Combined with the aggressive actions of the Federal Reserve Bank, the government is throwing all its weight behind fighting this economic downturn and it will make a difference!
But maybe more importantly is the rapid response of the private sector. After all, industrial advancement is one of the largest factors that won the Civil War for the North and WWII for the Allies. Here is what I am seeing:
3M implemented the “X Factor.” After previous epidemics, they learned that they needed capacity to rapidly increase production of protective gear. They warehoused machinery and had a “surge capacity” in place and employees standing by and ready to work overtime. They typically produce 400 million N-95 masks. They increased volume and are projecting to produce over a billion of them this year.
Read in Bloomberg Businessweek: https://apple.news/Ad4W2KIplQ9-jEmktPoV8gQ
GM is partnering with a ventilator company utilizing their expertise in mass production to develop this excellent ventilator product efficiently. They hope to increase production from 250/month to 10,000/month and make over 200,000 this year! https://apple.news/AMkLmOrUwQnSIGiYhImdmxw
Abbott Laboratories has created a cartridge to use in their existing virus detection machines which will allow them to run 50,000 COVID 19 tests per day in April. This will increase rapidly with time. The test will take 5 minutes (not 15 days like my employee’s test!). This nearly doubles the existing capacity.
Read in Bloomberg: https://apple.news/A9kJNsRkJQlye5TY8G26RiQ
OR go to the source: https://www.abbott.com/content/abbott/en-us/corpnewsroom/product-and-innovation/detect-covid-19-in-as-little-as-5-minutes.html
It’s not limited to large companies either. Peter recently ordered a couch from Sherrill Furniture; a furniture manufacturer in North Carolina. They informed Peter and Charlotte that the delivery would be delayed because their suppliers are now making medical masks! (The suppliers include Sherrill Furniture, Bradington Young, Century, Huntington House and American Leather).
Then there is the adaptation. Companies are working remotely, just like we are. I expect most of you have been invited to a “Zoom” meeting. Like Frederich Family Wealth Advisors, companies are finding ways to be as productive as ever and more connected to their clients and to each other.
I could go on and on, but what is the bottom line?
Well for one, I am proud to be an American where we find creative solutions rather than wallowing in despair.
Two, I don’t expect this to be a multi-year economic or market problem. This virus caught us “flat footed.” Like Pearl Harbor, we were not prepared and are paying the price. But if this virus returns, as feared next flu season, we will likely be much better prepared given what government and corporate actions are being taken. Testing should be common. Once we can test quickly and easily, you can find out after you have contact with someone if you are infected. Then if you test negative, you can go back to work and dinner at your favorite restaurant. If you are positive, at least you know and can self-quarantine. Right now, we must treat everyone as if they are contagious. This is very expensive and disrupts our way of life. However, it doesn’t have to be this way.
Read in The Atlantic: https://apple.news/AcMEfUzPSRaOzwVmkE5JRJQ
With proper testing and equipment, the death rate in the future should be much lower.
That means we can get back to life and business. This would indicate that while the short-term looks tough, the mid-term looks much better as we take action to make it so.
What this means to us all at Frederich Family Wealth Advisors is that, while we will review your individual planning with you personally, your comprehensive financial plan likely remains on track. As I mentioned in my last email, we reduced risk quite early in this downturn. We are still in “that period” where we think you are better positioned to stay conservative as we weather the storm. This pandemic will likely get worse before it gets better. As it does, this will likely bring increased fear, corresponding decrease in personal and corporate earnings and further potential market decline.
That being said, we are long-term investors. Given the above expectation that this will not be a multi-year event, we will likely add back your exposure to equities sooner rather than later to capitalize on attractive valuations. We can get back to business as usual with lessons learned, cultures changed, and productivity increased. I am very hopeful that this will also be an opportunity to pull together and unite as Americans and world citizens.
Pearl Harbor lead the United States into action that changed the course of history. The current situation will likely do the same. We will continue to stay diligent and take action accordingly. We will not be the victims of circumstance. This may be our finest hour as Americans as we come together to find solutions. We are honored to serve you and be your ally during this difficult time.
As always, please let us know how we can partner with you better. You have my cell, 626-390-1871 and I love receiving your emails. May you have peace in this storm.
Blessings,
John, Peter, Chris and the Frederich Family Wealth Advisors Team