{"id":42415,"date":"2023-11-05T13:31:59","date_gmt":"2023-11-05T13:31:59","guid":{"rendered":"https:\/\/innodebt.com\/investing\/im-feeling-the-pain-with-you-what-financial-advisers-do-to-keep-you-from-panicking-about-stocks\/"},"modified":"2023-11-05T13:32:01","modified_gmt":"2023-11-05T13:32:01","slug":"im-feeling-the-pain-with-you-what-financial-advisers-do-to-keep-you-from-panicking-about-stocks","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=42415","title":{"rendered":"\u2018I\u2019m feeling the pain with you.\u2019 What financial advisers do to keep you from panicking about stocks."},"content":{"rendered":"
\n

Amid raging wars and government dysfunction, it\u2019s no wonder that some investors fear a stock market collapse. They figure the worst is yet to come. This puts financial advisers in a familiar role: handholding.<\/p>\n

Bracing clients for loss is a delicate dance. Advisers need to provide long-term reassurance while setting expectations for further short-term portfolio pain.<\/p>\n

\n

Seasoned advisers train their clients to handle steep losses without throwing a fit. They repeatedly urge jittery investors to \u201cstick with the plan\u201d and \u201cride out the cycle.\u201d<\/p>\n

But emotions can get in the way. \u201cRight now, most people are thinking borderline apocalypse,\u201d said Cameron Valadez, a certified financial planner in Riverside, Calif. \u201cThere are so many global issues going on. But when you look back, you see so many crises. It felt the exact same at the time as it does today,\u201d yet the crises passed and markets recovered.<\/p>\n

From experience, Valadez knows that providing a detailed history of the market\u2019s resilience probably won\u2019t address a client\u2019s concerns. \u201cYou can\u2019t throw out lots of statistics and financial jargon,\u201d he said. \u201cIt\u2019ll go in one ear and out the other.\u201d<\/p>\n

Instead, he uses simple graphs or basic facts to calm anxious investors. For example, he shows them a graph of S&P 500
\n SPX
\n performance from 1970 to the latest quarter. \u201cYou can see how the market has grown substantially through all the market crises, about 50 of them, since 1970,\u201d he said.<\/p>\n

He may also point out that since 1937, the S&P 500 has a 93% chance of producing a positive return over any five-year period. For retirees worried that they lack enough time to outlast a sustained downturn, Valadez tells them that the S&P 500 has a roughly 88% chance of positive performance over any three-year stretch.<\/p>\n

\u201cThey think things will get worse and worse and worse and then their money will run out,\u201d he said. \u201cOften, that\u2019s the root of their fear.\u201d<\/p>\n

Part of the challenge for advisers is helping clients feel a sense of control over calamitous events that spiral out of control. Because their clients took preparatory steps to withstand shocks, they are more likely to face crises without panicking over money.<\/p>\n

Eric Amzalag, a certified financial planner in Woodland Hills, Calif., guides new clients through an exercise using \u201cEisenhower squares.\u201d Also known as the Eisenhower matrix, it involves drawing quadrants and labeling each box based on what\u2019s urgent and\/or important.<\/p>\n

\u201cIt helps focus client\u2019 priorities on things that are urgent\u00a0and<\/em>\u00a0important,\u201d Amzalag said. \u201cThen they can focus on behavior-based things that are under their control.\u201d\u00a0<\/p>\n

For instance, funding a client\u2019s emergency cash bucket is both urgent and important. It\u2019s the key to limiting damage in a market rout. \u201cSo when crazy things happen in the world, they have a frame for it,\u201d he said. \u201cAnd that keeps them aligned with the proper behaviors\u201d so they don\u2019t resort to panic selling.<\/p>\n

Inexperienced advisers may try to calm anxious clients by appealing to logic. But that rarely works if someone\u2019s too emotionally wound up to listen. \u201cWhen I first started as an adviser 16 years ago, I\u2019d make the mistake of thinking that what was on my mind was the same thing that was on the client\u2019s mind,\u201d said Rene Bruer, a certified financial planner in Colorado Springs, Colo. \u201cBut I learned that what\u2019s triggering their fear can be totally different.\u201d<\/p>\n

Bruer soon learned to adjust his approach. Rather than assume he understood a client\u2019s fear, he started asking open-ended questions and then keeping quiet. <\/p>\n

To manage client emotions during plummeting markets, Bruer follows a two-step process. First, he writes an email urging clients to maintain perspective. He might remind them that they have diversified portfolios while other investors lack such diversification. Or that his clients know not to time the market with frenzied buying and selling decisions while other investors compound their losses by making rash trades.<\/p>\n

A few days after sending the email, he will call clients and say, \u201cJust checking in. How are you doing given what\u2019s going on?\u201d<\/p>\n

As they open up about their fears, he doesn\u2019t offer false hope. Indeed, he shares their concern. \u201cI\u2019m feeling the pain with you,\u201d he might say. \u201cStill, I\u2019m not making any moves to my portfolio. And I don\u2019t recommend that you make any moves in yours.\u201d<\/p>\n

More:<\/strong> Wall Street analysts are souring on stocks. That could mean the S&P 500 is poised for a 15% rally, B. of A. says.<\/p>\n

Also read:<\/strong> <\/strong>Financial advisers make rich people richer. But is that all there is?<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Amid raging wars and government dysfunction, it\u2019s no wonder that some investors fear a stock market collapse. They figure the worst is yet to come. This puts financial advisers in a familiar role: handholding. Bracing clients for loss is a delicate dance. Advisers need to provide long-term reassurance while setting expectations for further short-term portfolio […]<\/p>\n","protected":false},"author":1,"featured_media":42416,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[32],"tags":[],"class_list":{"0":"post-42415","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\n\u2018I\u2019m feeling the pain with you.\u2019 What financial advisers do to keep you from panicking about stocks. | Innodebt<\/title>\n<meta name=\"description\" content=\"Amid raging wars and government dysfunction, it\u2019s no wonder that some investors fear a stock market collapse. They figure the worst is yet to come. 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