The deteriorating economic climate is being registered in a gyrating stock market as well as in the uptick in concerned calls that financial advisors say they are fielding.

“Clients are very, very concerned. It is a matter of holding the fort and recommending that they not make sudden changes,” says Karen Altfest, a certified financial planner with L.J. Altfest & Co., New York.

Some clients have called the firm and say ‘at 10 o’clock, the market was at such and such,’ says Altfest. Other clients become “fixated” on market movement when they should “focus on the real ball: their own retirement,” she continues.

Altfest says she wishes she had “a salve” to make clients feel better, but in lieu of that she says her firm has been sending out 2 letters a week for the past 3-4 weeks, and extending weekend hours and morning hours before work so clients can drop in if needed.

What also helps, she says, is for them to not only have a long-term retirement goal but also shorter goals. For instance, a planner might call a client after the presidential election or say ‘let’s talk after the New Year,” Altfest suggests.

Clients are now susceptible to both fear and a wide assortment of commentary and opinion, she says, and that is why planners need to make sure they reach out to their clients. For instance, she says, one client wanted to follow the advice of a commentator whose advice Altfest considers “uneven.”

Altfest also recalls a “savvy” client who surprised her by his desire to sell and get out of the market.

In certain cases, she says it makes sense for a client to be out of the market, such as 3 female clients who are in their 90s or another client with uncertain job prospects who instructed Altfest to put 2 years’ worth of living expenses in money markets to ease her mind.

One solution may be to move a piece of a client’s equity holdings into cash holdings, but the client should also be reminded that missing the market bounce back up will be a sad thing, according to Altfest.

Ron Palastro of R.S. Palastro Financial Planning Services, Brooklyn, N.Y., says “some [clients] were very concerned. Some were out right fearful. But fortunately, very few are panicked.”

One major reason, he says, is that he is “very proactive” in reaching out to clients. “Any time the market is looking really ugly,” he adds, “we send out ‘hand holding letters.’”

Palastro says he focuses on life planning and where clients want to be in their lives in 5-10 years. He says he has a strong opinion about the strength and resiliency of America and the U.S. economy and that, in fact, the current markets are a tremendous buying opportunity.

If a client comes to him and wants to sell out of fear, he says he would try and reason with that individual.

For instance, Palastro says he had a new client who had $1 million in his pension that he insisted on moving to a money market, ignoring advice to look at retirement as a long-term initiative.

Palastro says by removing himself from the market, this client has missed opportunities including the 962 point gain of the Dow Jones Industrial Average on Oct. 13.

“If you organize your life around goals and priorities, everything else will fall into place. But, if you jump off of a moving train, you’re going to get hurt,” he cautions.

Not all clients tell their planners what they are doing, however.

Kathleen Piaggesi, a certified financial planner and owner of K/A/P Planning Advisory in Scarsdale, N.Y., says regular contact with clients prior to the fall market turmoil paid off when only one concerned client called regarding action in light of the stock downturn.

Unfortunately, according to Piaggesi, the client called to say she had liquidated a variable annuity. Piagessi says she tried to help her undo the action but it was too late.

But early communication helped most of her clients stay the course, she continues. In August 2007, she started to communicate with clients when she realized that the credit markets were tightening, recommending clients move money they would need into U.S. Treasuries and money market funds.

When Bear Stearns was seized last spring, Piagessi says she started sending communications with both an interview with a fund manager and her own commentary on points she wanted to make to educate her clients. By including comments with the fund manager interview, it diminished some of the alarm that might have been caused if clients received correspondence specifically about a troubling market event, she continues.

Piagessi says she has done her best to assure clients that if they have sufficient cash flow for 2 years, then they will not need to access investments. In such cases, “you can ignore much of what is going on and hold tight. But if you truly can’t sleep at night, then you should lighten your investments or go to cash.”

Market concerns also have a ripple effect on other aspects of financial planning, Piagessi notes. She recalls a client who requested help with putting a long term care policy in place. She worked with the 67-year-old to carefully construct the contract so that premiums could be met and was even able to get a preferred status, only to have her change her mind once bad financial news hit, according to Piagessi.

She wanted to use the free-look period to get out of the contract and get the initial premium she had paid back, Piagessi says.

Now she is trying to reassure this client that buying a LTC policy is a good thing to do, Piagessi adds.

Joseph Birkofer, a principal with Legacy Asset Management, Houston, says clients have reacted differently depending on their level of sophistication and confidence in the market. For instance, he says, one client, a man in his 30s, says it is just a blip on the radar screen while other “youngish” clients want to know what a T-bill is and whether they should be investing in them.

The range of reaction underscores “a real failure of my industry to get people to understand long-term investing,” according to Birkofer. “People think short-term when the only source of information is drive time radio or front page headlines.”

When consumers rely on financial news from the Internet, the news is often “self directing,” he continues. If you get on a Web site that is a “pipeline of fear,” that is what you will get, he adds.

Birkhofer says the amount of ready cash that one needs depends on age.

For those who are age 25-55, Birkhofer says there are 2 steps in assessing the amount of cash that is needed. The first step is to have enough to cover any deductibles and the second step is to have a layoff cushion of 3-6 months, he adds.

At around the age of 55, he continues, for the last decade of employment, individuals should begin accumulating cash so there is enough to cover 2 years of expenditures, Birkofer adds.

But there are many planners who don’t closely follow a client’s cash position, he continues, because “we don’t make money on cash, so we don’t focus on it. But if you are a good planner, then you are a coach, and this is part of what you should be encouraging.”

But even if an appropriate cash position is important, Birkhofer says an individual must try to prevent fear from forcing them to sell in a down market. He notes the example of a client who sold her market holdings in January, noting now she is left with the dilemma of determining when to get back into the market.

“When do you buy again? When you get out and when you get in. You have to get 2 decisions perfect,” he says, explaining the dilemma.

Birkhofer says “the wreckage of the last few weeks shows that risk can never be completely eliminated and that they must be balanced with rewards.” And, he concludes, “We as a financial service industry encouraged toxic mortgages and derivatives. At least in theory, we eliminated risk. It just proved not to be true.”