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What to Say to Your Clients During Volatile Markets
Wednesday, June 27, 2012
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Have you been at a loss for words lately?

I know. It’s not easy being a financial advisor right now. The markets seem to jerk violently based on the latest headlines and it’s next to impossible to figure out what the heck is going on. Gone are the days when investments moved up or down based on their fundamentals.

Now, it’s a globally synchronized market with “risk on” and “risk off” days that make your head spin.

Yet, your clients still turn to you as the face of calm and reason. They’re paying you to effectively navigate whatever is thrown in the way and do it with grace and effectiveness.

Putting your clients at ease with some reassuring words is one step in the right direction. Here are five quotes that you can share with your clients when the appropriate time arises:

“Look at (market) fluctuations as your friend rather than your enemy—profit from folly rather than participate in it.”

-- Warren Buffett

Pull this one out when you explain the madness in Europe and how you’re not going to get caught up in the ever-changing landscape. Instead, you develop a concrete plan with a built-in “margin of safety” that allows you to filter out the day-to-day noise in the markets.

“If you watch a basketball game and at the end of the game the score is 105 to 95, no one says, wait a second, in the third quarter, you lost 28 to 18. What was the story in the third quarter?”

-- Peter Lynch

You can paraphrase this gem from Peter Lynch to let your clients know that today’s prices are just for people who are selling today. Since your clients aren’t selling today, what matters is the future price – the price at the end of the game.

“In the stock market, the only way to get a bargain is to buy what most investors are selling.”

--Sir John Templeton

We all love bargains – except in the stock market! When stocks crater, many investors get scared and bail out. However, if you own an effectively diversified portfolio, the more stock prices go down, the less risky they become. Intellectually, that makes sense, but emotionally, it’s tough to implement. Your job is to make a profit by combining intellect and emotion on behalf of your clients.

“It is learning to listen to the gloom and doom at bottoms and question it, and to the exultation at tops and question this as well, that makes a sharp investor.”

-- Jim Rogers

Today, there’s lots of doom and gloom about what’s happening in Europe, China and the “fiscal cliff” in the U.S. Yet, this too shall pass. Maybe not this month or this year, but eventually, the system will cleanse and prices will rise. Not getting too glum in gloomy times or too giddy in bubble times will serve you well.

“No matter how much or how little money you have flowing through your life, when you direct that flow with soulful purpose, you feel wealthy. You feel vibrant and alive when you use your money in a way that represents you. Not just as a response to the market economy, but also as an expression of who you are. When you let your money move to things you care about, your life lights up. That’s really what money is for.” 

-- Lynne Twist

Sometimes, a little perspective is needed. Markets go up and down but at the end of the day, we have to bring the focus back to the purpose of money. After our basic needs are taken care of, where does the money go? If all you do is help your clients accumulate more money – without discussing what that money means to them – then you’ll experience a hollow victory.

Nobody knows whether the S&P 500 is on its way to 900 or 2,000. Either way, the conversation you have today with your clients will determine how successful you both are.

__________________________

Steve Sanduski, CFP®, is a New York Times bestselling author and co-author of, Tested in the Trenches: A 9 Step Plan for Building and Sustaining a Million-Dollar Financial Services Practice. To learn more, visit, http://www.peakadvisoralliance.com/ and http://www.truewealthcommunity.com/.

 

 

 

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