How advisers are calming clients

My financial adviser called me last week to make sure that my pulse wasn’t racing. I told him that I honestly wasn’t panicked about the slowing U.S. economy, escalating debt problems threatening Europe and the prospect that the markets would repeat their 2008 collapse.

If nothing else, 2008 taught me that it is easy to allow emotions to drive investment decisions. And that investors who act on emotions often throw their long-term investment plans off course.

Over the past three years, I stuck with a consistent investment plan and was rewarded when the market bounced back.

As our phone conversation ended, I assured my adviser that I knew that he had me covered for the long haul. He thanked me for placing my trust in him.

The call from my adviser prompted me to reach out to other advisers to see what they were doing to calm their clients.

“We always initiate calls to clients before they have a chance to call us,” said long-time adviser Vern C. Hayden, president and founder of Hayden Wealth Management Group. “We actually have a priority list where those who worry the most get called first.”

Besides the obvious increased communication with clients, Mr. Hayden said that his team spends a great deal of time reviewing and analyzing every client portfolio.

“We make some changes if necessary for the comfort of a client,” he said. “For each portfolio, we will review the benchmark, which consists of the client’s goals, time frame and risk tolerance — not the S&P 500.”

Doug Flynn, co-founder of Flynn Zito Capital Management LLC, also is staying in close contact with clients by sending out e-mail blast updates, which the firm does regularly during volatile market periods.

“We use the common questions we hear from clients to drive the content in those e-mails,” he said.

“It helps allay others who just haven’t had a chance to call or contact us yet. But we all know that when we hear the same questions or concerns, we need to address them and get out in front of them,” Mr. Flynn said.

I asked him how uncertain times shape his perceptions of himself as a financial professional.

“Having a trusted adviser to bounce things off of is invaluable,” Mr. Flynn said.

LONG-TERM PLAN

“It helps investors to stick with their long-term plan,” he said. “Advisers know that making short-term, emotional trading decisions in a long-term investment plan can be disastrous if not handled correctly.”

Mr. Flynn is reassuring clients by running current performance reports with year-to-date returns, as well as performance results since July 21.

“Relative performance in a time like this helps to show the value we are bringing when the market is down more than 10%, and a client is down less,” he said.

Clients are getting more accustomed to bigger market gyrations after the experiences of the past several years, said Pasquale Sacchetta, president of CFIG Wealth Management LLC.

“Most of my clients have conservative plans and allocations and are well-guarded for these types of market swings,” he said. “My younger or more aggressive clients usually need a little more hand-holding.”

A trusted adviser is more critical now than ever because there are so many investment alternatives to consider and because most asset classes and investments, with the exception of gold, have suffered of late, Mr. Sacchetta said.

“Unless someone is going to take all of their money and buy gold, clients need a financial adviser who is being a good steward and following a solid financial plan based on solid fundamentals,” he said.

Personally, I plan to sit tight knowing I have the right investment strategy even during these rough spots.

Jim Pavia is the editor of –InvestmentNews.

Related Topics: ING Group, Just Thinking