Many clients might be saying: “The stock market shouldn’t be doing this. It’s supposed to go up, not down.” You have been beating the “rebalance your asset allocation” drum for years. Some clients weren’t listening. Keep playing that tune.
The concept of asset allocation aligns with a client’s risk tolerance. The more risk averse the client, the smaller their exposure should be to equities. Another key message is rebalancing. As the market rises, equities become overweighted. The client should be moving money from equities into fixed income and cash.
That’s what my advisor tells me. I keep saying “bonds are boring,” then grudgingly follow her advice. It’s been said advice is worth what you pay for it. Put another way, if you are paying for advice, you should follow it.
Your client might be reluctant to follow advice, especially when the stock market is rising. They will remember you gave it and provided leadership.
A key message you are delivering when you talk about asset allocation is this: You are paying attention. If your client thinks they are sailing into uncharted territory, they aren’t going alone.