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Retirement Planning > Retirement Investing

Investors Only Need You In A Down MarketLike Now!

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Investors Only Need You In A Down MarketLike Now!


Clients emotions and behavior influence how they perceive the value of your services. And on their own, you might have seen some of your clients react in ways that range from bizarre to self-destructive.

But recent events that have affected our economy and lifestyles may present opportunities for you to reinforce your importance to otherwise rational people, many of whom may have previously resisted your financial advice because of greed, hype, fear, or pride.

Most Investors Are Not Successful Market-Timers

A new study of mutual funds confirmed that a buy-and-hold strategy would have provided investors with greater long-term returns than the short-term trading philosophy.

Looking at the average return investors earned between the years 1984 and 2000, its clear that investors should have held their investments. (See chart on p. 6)

If you look at how long investors held their mutual funds (see chart on this page), youll understand why their returns often trailed the benchmarks averages.

Discuss these numbers with your clients. Let them know that your job as a motivator and hand-holder in good times and bad has never had greater importance for todays investors.

Enron And The Jittery Market Have Made Investors Unsure

Many 401(k) plan participants have seen double-digit declines in their accounts and are now afraid to do anything other than putting their retirement dollars into money market funds. The NASDAQ crash, the 9-11 attacks, and the recession have contributed to their fears.

Numerous employees of good, solid companies have recognized that the percentage of their worth anchored to their firms is too risky. This could include company stock within their retirement plans, stock options, and stock outside their retirement plans. Previously reluctant to seek advice, these people now want your help.

Employers are concerned as well and have acknowledged their responsibilities. With potential liability hanging over their heads and new pressure to provide objective advice for their workers, companies know they need to do something. This is where you can come in and offer your professional expertise.

Long-term investing, asset allocation, and dollar-cost-averaging are what these people need to hear. They may have a good understanding of their particular industry, but they need to grasp that failure to diversify outside of one sector can be suicidal.

The sluggish economy, the volatile market, and all the publicity about Enron make this is an excellent time to contact the human resource department of employers in your area. Put together an outline. Explain that products will not be discussed, but participants will have the option to contact you for further information. Offer to hold a workshop at their facility. This will save you the cost of a restaurants meeting room and advertising the seminar.

Opening corporate doors is not easy. Even if you have tried this in the past, but were unsuccessful, go for it again. In todays corporate environment you may find a warm reception.

Pool-Planners Lose Credibility In A Down Market

Have you ever had clients tell you that while they were at the community pool their neighbor told them that they should only buy stocks that sell for less than $5? Or that they could save money by trading online?

If your clients followed the pool-planners advice, theres a good chance that by now theyve realized that listening to a so-called expert in the adjacent lawn chair can be detrimental to their financial well-being. Theyve been burnt by the hype and sizzle, misinformation, and wishful thinking and know that there are certain things that they cant do on their own.

Investors are looking to delegate the responsibility of managing their financial future. This presents an opportunity for you to contact your clients and help them realize the services you perform.

Reexamine What You Do

As a financial advisor, you help clients prioritize what is really important to them. You make them put their goals in writing, and you pull out of them how they define these goals in terms of time and money.

You use that information and put together a plan. And it doesnt matter whether you have fancy software that spits out a multimedia presentation or just a notepad and calculator. The financial roadmap shows your clients how realistic their goals are and how you can help them.

Let them know that you wont have an emotional connection with the investments in their portfolios. Explain that working with you will prevent an impulsive reaction, which typically leads to a loss, when the market takes a dip.

You offer clients the freedom to relax and pursue their own lifes pleasures while you take care of their investments. Youre knowledgeable, you understand their personal situation, and youre someone they can trust. This is the value-added service you provide. And now is an ideal time to strengthen its importance in your clients minds.

is president of NF Communications, Walnut Creek, Calif., which produces marketing systems for financial sales professionals. Larry may be contacted via e-mail at [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 5, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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