Whenever markets sharply decline, a lot of people suddenly wonder whether they should flee to cash. It’s up to the financial planning community to rise up and remind clients that this is usually not a good move.

But clients make other mistakes, too, especially when they are lured to the pitches of certain products beyond cash.

I’ve been through more than a few bad markets, and every time, the drumbeat of negativity makes some people consider investments they wouldn’t otherwise. Bear markets are always fertile ground for scams, but scammers need not defraud you outright—they need only entice you to buy inferior products and rationalize them as sensible “adjustments.”

So planners beware: The pitches for these bad products are coming.

If the current market malaise is any indication of past swoons, here are some products planners should be prepared to see held out to clients.


With the recent drama in Washington, the idea of holding something that could benefit from a dysfunctional government has appeal. With many people on both ends of the political spectrum concerned, gold will get a lot of touting as a smart play for safety.

You probably won’t get very far by pointing out that gold has no projected earnings stream—that it does not, and never will, produce anything. After all, that’s true of commodities generally, and many rational portfolios have some exposure to commodities nonetheless. The fact that gold has been far more volatile than mainstream financial products probably won’t influence a fearful client who is sure economic disaster is imminent.

What has helped clients take pause is a direct commonsense rebuttal of the main pitch. Gold is pitched as a "diversifier"—some form of protection against economic harm. Specifically, it is lauded as a hedge against inflation and currency devaluation. After all, gold has been used on and off as money through history.

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