Supporting clients in a volatile market

“But, traditionally, it will come back. And when it comes back, it can come back quickly or slowly,” she told the client. “The best thing we can do now is take advantage of this negative period and invest slowly over a period of weeks, sometimes months.”

When it comes to managing a client’s emotions during tough markets, Rae said it’s important to really listen to your clients.

“Their feelings are valid. They imagine nothing. Their portfolio is fall,” she said. “[We have] understand that my level of comfort with the market downturn may be different from theirs and really listen to what they say. In the end, it’s their money, and they can do what they want with it. I’m just here to be a sounding board and to make recommendations based on what I know.

For example, the 70-year-old client had a good amount of money in her savings account when she recently sold a property. The money was just there and not earmarked for anything in particular, “so it was a really good opportunity for her to invest,” Rae said. They gradually moved the money from the savings account, positioning the customer to buy on the downside.

David O’Leary, director at Kind Wealth in Toronto, also puts market declines in the context of future gains when speaking with worried clients.

“We’re talking about the fact that when the market goes down, that’s the price we pay for assets to go up over time,” he said. “The market does not rise indefinitely. If stocks went straight up, they wouldn’t offer the same returns. They would offer returns like a GIC. »

O’Leary said this reframing can be effective.

“It ranges from ‘Oh, this is a disaster happening to me,’ to ‘It’s a necessary part, an ingredient to generate the kinds of returns I need,'” he said. ” It’s planned. It’s planned. We created the wallet to weather these types of storms in the first place. We have a plan for that. And I think [those realizations are] empowering people.

Rae said she’s had most of her clients for about 25 years, so they’ve seen about three bear markets in their time with her.

“They’ve had a lot of experience with the ups and downs of the market,” Rae said.

The downside, she said, is that when clients have a higher net worth, like $1 million, and the market is down 10%, “the [absolute] the number of drops is huge” – even if the percentage is the same, which she emphasizes to customers.

Rae used an analogy of flying in an airplane to illustrate her approach to calming customers down.

“I don’t like to fly. When it’s turbulent, I watch the flight attendants to see how their body language is and how their reaction is. And if they’re calm, it calms me down,” Rae said. “If I talk to a client and review the calculations [showing them] ‘10% is 10%’ reassures them that I am calm, I understand that, and everything will be fine. This helps them understand that “it will happen; it will happen again.’

Rae also reminded her clients of the time and work they put into building their respective portfolios and financial plans. Rae likes to take a managed money approach, adding a part cash and a part equity.

“When a client comes to us, especially a client very close to retirement or in retirement, the most important thing is to keep what they have and to have an extra rate of return,” Rae said. “[Having an] a bit boring, and a bit safe and secure, can really make a difference in a bear market.

Rae noted that she tends to stay away from “trendy things,” like cryptocurrencies and cannabis.

About Meredith Campagna

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