Negative financial news in the media can affect investors’ decisions, making them too cautious, says John Diehl, the Hartford Funds senior vice president.
Anxiety and stress are created by negative news coverage, adds Diehl, based in the Radnor, Pa., Hartford Funds headquarters, and that causes people to sit on the sidelines when it comes to making moves in the market.
A financial advisor is crucial to breaking this cycle, he says. A good advisor needs to counter the negative news with a long-term perspective of the markets by pointing out that there are always good potential investments. Clients who hesitate to act are caught up in short-term thinking.
“Advisors can provide information on such markets as 3-D printing and industries that will benefit from American energy independence,” says Diehl. Advisors need to point to the positive to counter clients’ stress-related anxiety.
The Hartford Funds has launched Media Replay to help financial advisors talk clients through the anxiety created by negative news. Studies have shown that when people are fearful or anxious, they see all news as negative and they look for the negative in neutral situations, Diehl adds.
Media Replay includes an interactive educational Web site, as well as workshops for clients and advisors to look at investing behavior and determine if portfolio’s are too heavily invested in fixed income.