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July 07, 2016 at 06:00 AM
The markets may be recovering from their Brexit losses, but many clients are still worried about what will come as the market continues on its volatile path. It’s uncertain if the United Kingdom’s future will affect the global markets, but advisors must be prepared to discuss the situation with their clients.
Over the past week, the average market return was -0.10. Many billionaires across the world lost millions of dollars within 24 hours of the Brexit vote. That’s enough to scare clients into thinking their portfolios are not safe. In fact, according to Openfolio 75 percent of investors lost money in June. Below is more statistics from the investment portfolio site:
As July begins, and we’re all looking to gain back the losses from the first month of the summer, here’s what four financial professionals had to say about how to talk to clients and what exactly you should be saying.
What clients want to know
Best investment right now
Time to take your family for a trip over the pond! 1985 was the last low of the pound when it was about $1.30 to 1 pound and Friday, June 24, it closed about $1.36 USD to 1 pound. This means all lodging, entertainment, etc. are going to be a lot cheaper for your family.
What does this mean for my 401(k)?
1. It depends what you own. Expect short-term volatility, but realize you should only be in stocks if you are in it for the long run.
2. This will be a great time to shift assets to buy what’s on sale in your 401(k).
3. Consider paring down your position in Europe and international and put more money in U.S. stocks, natural resources and U.S. Treasury Bonds over the next year.
Where should I invest money now?
1. Quality dividend-paying stocks: Especially VICE stocks that include alcohol, gaming and tobacco as they tend to do better during turmoil. People can’t help themselves to get back to human nature and their vices.
2. Real estate investment trusts and gold
How can I protect myself in case of a meltdown
The biggest question to ask yourself is do I have protection on my money. Whether you run stop losses in your IRAs or brokerage accounts or seek out a high-quality annuity company that has products to help you minimize risk and produce retirement income guarantees, having protection will matter.
-Ted Jenkin, co-CEO, oXYGen Financial
Just tell the truth
“There is no need to fan the flames of fear. … Just tell the truth. That’s scary enough, especially for clients that can see their target retirement date on the horizon. Great Britain’s exit from the European Union was a reaction to globalization, immigration and the fear of terrorism. Many Brits feel they’ve been getting the short end of the stick from the EU for years. They gave up control over their money and their borders, and now, they want their country back.
In my opinion, Brexit alone is not much of a concern. Our relationship with Britain is more cultural and emotional than it is financial. The bigger question is what other surprises are looming out there? The experts didn’t see this coming. What else don’t they see coming? Additional countries pulling out of the EU? A continued wave of anti-globalization sentiment beyond the UK?
Markets don’t like surprises. The volatility isn’t likely to end any time soon. Clients and prospects with the stomach for it can choose to ride out the storm, but those that don’t will be looking for somewhere, and someone, to turn to for predictability and guarantees … if they haven’t already. That’s where we come in.”
-Paul Mallett, senior VP, COO, Postema Marketing Group, LLC.
