The events of 2001–a turbulent stock market, the terrorist attacks of Sept. 11, the economy falling into an “official recession”–have taken their toll on investors, especially in how much risk they want to take.
This year’s shocks have also changed the way agents are dealing with clients who are coming to terms with market volatility and tepid returns.
“With the market going down, I’m talking to more people about needs,” says Michael Goss, president of Michael Goss and Associates, Overland Park, Kan. “I’m needs selling again, rather than chasing a return.”
Goss and others say investors’ attitudes toward risk have changed.
“People are taking their blinders off, the market just doesnt go straight up,” says Goss. “I think people lost reality in that.”
Thomas Mignone agrees. “I think that people have redefined their risk tolerance,” says Mignone, who is a detached MONY agent with Capital Management Group, New City, N.Y.
“Prior to this sustained downturn in the market, not many investors really viewed the term risk as a very real scenario,” he continues. “Risk was this hypothetical thing where the market could actually go down and stay down for a while.
“When you talked about risk in the past, it was more like ‘How much money do you want to make?’” he says.
“People were thinking higher risk means higher returns. Long term it does, but its a bumpy road along the way,” says Mignone.
He says people now are more conscious of diversification, asset allocation, and value investing. “People are a little more gun shy, they’re more prudent with their investing,” he says.
Keith Roddy recalls past comments made by investors: “I’m really not greedy, I don’t want too much, a nice balanced portfolio with a 20% return will just be fine.”
Roddy, who is vice president and national sales director for Guardian Investor Services, LLP., a subsidiary of Guardian Life Insurance Company, New York, states that investors are still very nervous about investing in the market.
“Investors are being careful, more methodical about their investing,” he says.