Friday, June 24, 2016. Market opens down after surprise Brexit vote results; closes off more than 600 points on the Dow. Not a single client calls.

The news all weekend is dominated by Brexit. 

Monday, June 27, 2016, about 3 p.m., with the Dow off 300 points, I get my first call from a client since the vote. “Nelson” calls about getting financial statements for a mortgage on a new home purchase. I ask him about Brexit. 

His response: “Yeah, it stinks that the markets are getting hit, but you have us spread out all over and in lots of stable stuff, and you know what you are doing. We’ve seen worse, so we have no doubt you’ll do whatever needs doing and we’re gonna let you worry about it.”

The next call I got came on the morning of Tuesday, June 28, 2016 from “Bob” with whom I had never spoken.

“I wanted to get out when I saw the futures down 700 Friday morning, but I didn’t do anything about it. I watched the action carefully and when it was down 300, I thought maybe it was just one of those flash crashes. All weekend I studied it and hoped it would get better. I have always been a long-term investor, but after yesterday’s 260-point debacle, I just can’t sit there anymore. My advisor is very very worried and wants to sell given the irreparable harm from the breakup of the EU. What are you telling clients?” 

The Dow dropped the same amount for my calm client as it did for the freaked out caller. The caller explicitly said he was a long-term investor, and I know my client identifies as such. In both cases, the event that could trigger angst has come from an external source, not something unique to the caller or my client. Yet they are in very different emotional states.

This kind of contrast has come up in virtually all “crisis” situations in the past. It is usually caused by a combination of three things: the media, the advisor and the person.

The media certainly contributed to the caller’s stress levels, and that is partly by design. The presentation of information, commentary, prognostications and the like are quite deliberately provocative. The consumers of media must continue to consume for the outlets to make money.

In this case, I can only place some blame on the media. The vote was a surprise, and there is a significant economic and political storyline here worthy of coverage.

The advisor is also contributing to the problem. Don’t get me wrong. The advisor is entitled to his opinions and feelings. I don’t think it is healthy or proper to deny those feelings either. However, I am confident that one of the last things a freaked-out client needs is a freaked-out advisor. If the advisor can’t stay grounded and rational, how is the client going to stay grounded and rational?

I also take issue with the advisor’s urgency to sell and assumption about “irreparable harm from the breakup of the EU.” No one knows what will happen, and he shouldn’t be speaking with such certainty. Again, I am not saying the vote is no big deal nor am I suggesting a direction for the markets. I’m just pointing out that the advisor’s words and mood are not helping his client.

The biggest culprit here is the caller himself. He has decided to follow the story in real time. By doing so, he is fanning the flames of his own fears. It doesn’t have to be that way. 

This year’s NBA finals were played when I was overseas on vacation hiking in New Zealand (highly recommend, btw). Because of the time difference, the games were played in the middle of the afternoon for us when we were on the trails or busy with other activities.

One member of our group is an avid Steph Curry fan. On the day they played game 7, when we got back to our hotel, we saw the coverage of the Cavaliers win. His reaction to the Warrior loss was to wince and say “Aww. That’s too bad.”

Had he had access to a TV, he surely would have provided us with an animated display of emotion. I’ve seen it.

That’s the difference from hearing a result after the fact and watching the result unfold live.

The caller is tense because he has put himself in position to be tense. He is ingesting information from a provocative media and is trying to decide what to do about it with someone who is adding another layer of stress.

He could choose to do something else.

My calm client has made other choices and seems far better off for it.

My client doesn’t watch cable news. He will watch a little local news and reads a local paper that includes national and world news. He knows about Brexit, but the information was not shouted at him by four talking heads all spouting off at the same time interrupted only by an anchorperson teasing him to stay tuned.

He understands why he owns what he does. He understands the value of diversification and maintaining a long-term view. He knows markets are volatile, so volatility isn’t odd. He knows markets can adapt quickly and have recovered after shocks. He understands what we do for him. I think other clients share these qualities which would explain the lack of calls during the down days.

It wasn’t always that way.

When Nelson first became a client, he had a good handle on the basics of long-term investing so our emphasis on diversification, patience and discipline appealed to him. Our financial planning capabilities were also important to him.

He came to us in 2002 when markets had been rough and 9/11 was still fresh in our consciousness. He looked at the futures on the TV in the morning, checked on the markets at lunch and watched more when he got home and over dinner.   

His portfolio wasn’t bad, but we improved it. That was the easy part. After all, he had the basics down pretty well. He knew to keep a long-term view, he just had trouble actually doing that.

The harder task was coaching him to find a better way to interact with news. He wanted to be informed and that is a good thing. He was very worried the markets would tank if we sent troops into Iraq. When the troops were sent in, the market reacted by going up. He was able to recall several other times he was wrong and several times he was right about the market’s direction.

The turning point came when I asked him if he remembers feeling as anxious at those other times as he did this last time around.

“I’m not clear which ones were the most tense but yes, I was tense each time,” he told me.

That led to a conversation about the source of the tension and the things that fed it. News was the number one contributor. From there, we explored alternative ways to stay informed. Eventually, he chose to eschew almost all cable news. The antics of many on the tube in the wake of Lehman Brothers sealed the deal.

He was anxious through that time (who wasn’t) and I like to think my relative calmness helped him out, but the outrageous and inflammatory statements by so many struck him differently. Instead of something he needed to make decisions, the news looked like a source of stress. He was now laughing at the folly of making decisions about your personal finances based on the news. He has sailed through all the other “crises” like the downgrade of the country’s credit rating, the fiscal cliff, Greece, Cyprus banking, the tsunami in Japan and Russia’s activities in Georgia.

Some clients watch a lot of cable news and that’s fine as long as they don’t change their portfolios based on what they watch.

If a news outlet gets you uptight, don’t consume your news from it. It’s that simple, but it’s not that easy for many. You can help.

Financial planners love to get people to focus on what they can control. With enough coaching, clients can control how they consume news and what they do with it. This tale of two telephone calls in the wake of the Brexit vote is just the latest example. If you blow this chance, don’t fret too much. Another chance will come along soon enough.

Dan Moisand, CFP, has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. Moisand practices in Melbourne, Fla. You can reach him at www.moisandfitzgerald.com.