Setting expectations
Take advantage of regular review meetings or communications to reassure your client that market volatility is an unavoidable aspect of investing.
Remind them that you’ve designed their portfolios to help withstand the impact of volatility and reiterate that discretionary portfolios are designed to provide returns over longer-term.
You may need to be more specific and explain the role each asset class and sub-asset class plays (individually and together in the portfolio) to help reach their goals.
Help them understand that choosing an appropriate asset allocation, with a mix of stocks and bonds that is right for them, and then sticking to it, can help deliver better investment results over the long term.
The importance of staying calm
Explain to clients who are tempted to sell during a downturn that this not only guarantees at least a short-term loss but also makes it virtually impossible to know when to get back into the market.
To make it worthwhile, you need to get the timing of two decisions right, when to sell and when to buy back. Waiting on the side-lines while the market recovers often means clients can end up forfeiting gains they may need to reach their financial goals.
Risk tolerance
Periods of market volatility can provide an opportunity to speak to your client to make sure their risk tolerance is still current as experiencing volatility for the first time can lead clients to reassess initial attitudes. Reassuring, objective advice from you will be important at this time.
How we can help
Volatile markets can offer some excellent opportunities for your clients, if you would like to hear about these, please contact your business development manager.