How to Handle Clients Worried About Greece, China

OppenheimerFunds held on Wednesday a webinar outlining ways advisors can manage expectations and address client concerns during meetings.

Wednesday’s webinar is part of Oppenheimer’s quarterly series addressing issues that frequently come up during client discussions.

One of the biggest recent concerns, of course, is Greece. Moderator Jay Therrien, head of marketing for Oppenheimer’s CEO Advisor Institute, asked how to address clients’ concerns about how what’s happening there would extend to their own portfolios.

“The reality of Greece is that it’s the size of Miami,” Brian Levitt said. “It’s not a big economy. They do need their debt restructured. At some point they’re either going to leave the common currency, which is going to be a disastrous outcome for them, or they’re going to play ball with the European troika.”

He said that if Greece leaves the eurozone, it could be a disaster with rapid inflation and increases in nonperforming loans. Returning to the drachma would make it hard to import necessities like medicine, food and commodities. “If you took out a loan and now you have to pay it in drachmas, you can’t. Either way, it’s going to be a bad macro situation for Greece,” he said, but “should they exit the eurozone, they have a long plight ahead of them.”

In China, he said, there are a lot of things that need to happen, he said, “not least of which is allow creative destruction to emerge.” He said he doesn’t believe problems in China will expand to other markets. “You could see some pressure on some emerging markets, not necessarily because the Shanghai market has done this roller coaster ride, but primarily because growth in China is going to continue to slow.”

Moving away from those current events, Levitt said that the point of the webinar series is to “get away from the 24-hour news cycle” and provide clients with more “historical perspective on how markets have worked over very long periods of time.”

“The reality is as investors we want to have a plan and we want to stick to it and we want to have courage through all this,” he said.

Levitt showed a graph of growth in the Dow Jones industrial average from 1900 to 2014 showing that even though there has been significant volatility over time, it consistently trends up. That’s because it’s “reflecting improving human conditions, improving corporate conditions, improving reforms and restructuring throughout businesses and governments.”

Levitt recommended that to keep clients grounded, advisors should remind them they have to make three decisions correctly before getting out of an investment: “Are you right in getting out? Where are you going with that money? And most importantly, when are you getting back in?”