If you have clients who are sure the folks in D.C. will turn the national debt into a dollar collapse and lay out an argument of doom, be sure to ask them how confident they are this will happen and when. The gold salespeople are telling them it is inevitable and imminent, and that they should buy now. If they repeat that urgency ask, “If the dollar is so bad and the collapse is both probable and imminent, why would the gold firm trade its great gold for your lousy dollars?”

If that doesn’t slow them down, they may be too wound up to accept objective advice.

Alternative Investments

Alternative investments get a lot of play during bear markets. The press loves to profile people who called a market top or profited from its decline.

It all sounds so good. Hire the grand wizard that will zig when the market zags. There is a certain cachet to that.

Even advisors can succumb to the idea. Some want to bring an air of sophistication to their offering or think talking about something new will give their clients the impression they are working harder for them. In some cases, advisors put clients in such products because their employer firms are emphasizing them.

If you want higher costs, greater risks, greater dependency on a fund manager’s “crystal ball,” less transparency, low tax efficiency and curtailed access to your money, alternatives are worth considering. Fortunately, most clients find these qualities unattractive. Add to that the inability of most clients to understand how the products work, and these pitches are among the easiest to reject. Other than cachet and commissions (and I do not work on commission), I can’t see why an advisor would be interested in exposing their clients’ futures to so many unknowns.

Yes, ’40 Act mutual fund products have helped clients get access to these investment ideas, but the rest of the negatives typically remain. And, yes, I know endowment funds and the uber-wealthy tend to own alts. But my clients aren’t endowment funds and are not uber-wealthy. The markets are risky enough for my clients and they can only spend cash, not cachet.

Deferred Annuities

When markets decline, any pitch with the word “guarantee” can get a client’s attention. It is hard to find an annuity that doesn’t tout a guarantee.