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August 04, 2002 at 08:00 PM
Investors Only Need You In A Down MarketLike Now!
By
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.
