If your communications are going to add value, not detract from it, you need to be consistent in your philosophy and approach to client communications. Being open about it is important so prospective clients can better determine if they will get what they need from you.
Instead of acting as though these drops are shocking or even unusual, we take it as chance to remind clients just how commonplace drops are. In every year but one since 1980, the S&P 500 dropped at least 5 percent at some point, usually more than once. In most of those same 34 years, a drop of 10 percent or more occurred. All were accompanied by the same kind of “oh no” media coverage we see with the recent tantrum. Most clients can’t recall the cause of more than a handful of these drops.
So, what are we telling clients now? We know a few clients view any market pull back as the probable start of the next devastating bear market, but they are in the minority. For most clients, unless something far more dramatic happens, they will hear our thoughts about the taper tantrum in our regularly scheduled newsletter.
For the few that need more immediate attention, we are reminding them that they are investing not speculating. They own what they own for very specific reasons and we will go over those with them and reconfirm that those reasons persist. We are encouraging them to let the traders and speculators worry about where the S&P will be next month.
It is a complex, sometimes scary world with many factors beyond our control. Some level of worry is natural at times. We have to help clients deal with negative events. What, when and how you communicate can reinforce your efforts or work against it. Choose carefully.
Dan Moisand, CFP, has been featured as one of the 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. He practices in Melbourne, Fla. You can reach him at [email protected].