As I try to navigate the troubled financial waters with my clients, I am continually reminded of the emotional vs. rational response. Most of us planners are probably a lot like me. We can understand and work the numbers well and have a pretty good sense of what course of action is best for each client. If we’ve built investment strategies that are tailored to the client’s needs and risk tolerance (at some time) then it should be OK. I know that is what we are trained to do and I am rather sure we all do that. The tough part is getting the client, who actually is the person whose money is going up or down, to recognize what we have done together.
I don’t know about you, but every time we go through such a troubling period of volatility and downward movement, I go through periods of worrying about my client’s welfare and reassuring them. Usually I am successful; sometimes not. So it was rewarding when this past week a client called and I talked him through where we were. He had called saying he couldn’t stand to lose his money at this pace and wanted to cash it all in and be safe. In all candor, I was perplexed. I didn’t say so but just listened to him get his fears out. The next day I ran a calculation and discovered that since the end of June his largest account was down about $4500; hardly a princely sum! I sent him a note reminding him of the portfolio mix, why we had set it up that way, and how little he actually had lost. He called later the next day and said that after I had been hitting him up on the side of the head with a 2x4 for 10 years he finally got it.
To paraphrase Kermit, “It ain’t easy being a financial planner”. But I am encouraged that, as we educate more and more of our clients, the world gets better a small piece at a time.