It’s a mistake to say, “This is normal, don’t worry about it” as though this particular correction won’t become something much worse. No one knows that for certain. Imply this correction will be a mere blip, and have it turn out otherwise, the anxiety level is likely going to be high. That implication turns what should be good advice to stay grounded into potentially dangerous advice.

A client can easily think, “My advisor recommended staying the course because this drop was no big deal but it is. Why should I think he’ll be right this time?”

A better approach is first to be crystal clear that no one truly knows if this will get worse but historically the unknowability of the future has not been a problem if a good plan is in place.

If your clients must avoid bear markets to succeed, they have bad plans. A good plan expects bear markets precisely because they happen so often and are difficult to predict with enough precision to make moving in or out more profitable over time.

If your clients were panicky with the Dow off 1,000, consider this a wakeup call. Is how you are managing expectations demonstrating to clients the realities of investment markets? There is no better time than now for clients to become realists.

So both “Don’t panic” and “This is normal” are reasonable things to say but can also be problematic. So is the advice “Don’t sell”.  In fact, in some cases, selling is wise. I’ll give you one common example.

I work with a lot of retirees. In many cases, because they have remained investors and not succumbed to the temptation to become speculators, many have the largest portfolio balances they have ever had in their lives. Further, even many that have been drawing on their assets since before the Great Recession have no fear of exhausting their nest eggs. Their accounts have done well, they are a decade older, and they have discipline around their spending.

They survived the last really nasty market in 2008-2009. Today, they can say to themselves that if that should happen again, now, they know they can make good decisions and get through it.

Here’s the thing: The knowledge that they can navigate another period in which stocks get cut in half is comforting, but I am encouraging many of them to reconsider if they really want to experience that again. Some of them are going to decide they don’t need that kind of excitement in their lives.

As I write this the “bottom” of this recent correction was on February 8th with the Dow at 23,860 or about where it was at the end of November. If any of these financially secure clients had asked me to reduce their exposure to equities on February 8th, my inclination would have been to help them decide how much to reduce not whether it was a good idea.