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June 01, 2009 at 08:00 PM
The bad news emanating from today’s financial markets is enough to drive even the most successful financial advisor under the desk and over the edge.
But to be successful over the long term, it’s more important than ever to be positive and proactive. Reaching out to clients in today’s difficult market–particularly 401(k) participants–can help position you to manage more assets in better times.
So what do you say to your clients when you finally summon the strength to lift that 500-pound phone that has become the immovable object for the past few months? There are 6 key points to make:
(1) Don’t panic. Most likely, you need to treat your clients for “statement shock” after they have viewed their most recent 401(k) statement. Remind them that their retirement savings represents a long-term investment and, as such, can potentially repair itself over time.
For clients who are unnerved by market volatility–and who isn’t today?–suggest an asset allocation model to provide investment discipline and all-weather diversification.
(2) Gear your discussion to the age of your client. If your client is 35, point out that he or she is in the market for the long haul and has another 30 or 35 years to recoup losses. If your client is older, say 55, offer to conduct an in-depth needs analysis, re-examine his or her risk tolerance, and review the time horizon until retirement.
Depending upon how close your client is to retirement, it may make sense to shift more assets to cash. Don’t forget, though, that today’s stock market now resembles Filene’s Basement, with bargains available to savvy shoppers. Reexamine what sectors and individual stocks are poised for a rebound.
een what they have accumulated for retirement and what they need for retirement. Take account of all of their assets–retirement investments, savings, home and other property–when calculating what assets are available for retirement. Your clients most likely think the gap resembles a crack in the sidewalk when in reality it’s closer to the Grand Canyon. Once you know the real gap, you can help clients create a realistic action plan.