When Clients Are Nervous – and You Are Too!

Beverly FlaxingtonBeverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

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Dear Bev,

A number of our clients are watching the markets and becoming increasingly uncomfortable with the ups and downs. We have many retirees and soon-to-retire clients and 2008 is still fresh in their minds. They fear another disastrous downswing in their portfolios. Of course we talk about portfolio allocation, saving toward needs not just for returns, investing for all conditions and so on but the noise from clients keeps getting louder and louder.

Once, early in my career, I caved to pressure from clients and moved their allocation to a much more conservative structure. With 20/20 hindsight on my side, I can see it was the wrong thing to do because they lost out on a significant run up in the market and I lost every single one of them when times were good again.

I’m not asking you for investment advice, but I don’t know how to deal with the pushback from clients and even my own concerns about making another mistake like I did many years ago. Do I need some reinforcement that staying the course in these market conditions is the right thing to do?


Dear J.R.,

The investment industry is a fascinating business, isn’t it? Google “market outlook” and you will get 15 different viewpoints and predictions depending on the expert listed. No one can predict the future and even though we do have history as a guide, and certain algorithms that may (or may not) help with indicators, it is very difficult to call it right every time. I just completed a training course for a client where I included a great deal of information on behavioral finance and the impact of emotions on investing. I was reminded again of how much emotion, versus logic, plays into market activity.

Please do not to beat up on yourself for your mistakes of the past and to the degree you can, purge that memory because it is obviously affecting how you are making decisions. Our fears are always a combination of repeating past mistakes, or worrying about something unknown we don’t know how we will deal with or control. The problem with being fearful is that it limits our ability to make objective, unbiased decisions. You are doubting yourself and reviewing everything you are doing to ensure you don’t make another mistake.