With a new Federal Reserve chairman in place and interest rates likely to stay constant, many clients are likely asking you what the next rate decision means for their mortgage, their bond ladder, their equity allocation and their retirement.

While most advisors have the federal funds rate at their fingertips, I’ve found very few who can explain how the Fed actually works, how much it has changed since 2008, and why it matters for the advice they give clients.

If you understand the Fed’s mechanics and how the Fed influences the economy and financial markets, you’re better equipped to set client expectations, frame risk and hold a steady conversation when markets overreact to a Fed decision.

The Fed’s History, Compressed

Bear with me…