With whole economies shut down and comparisons being made with financial crises that have come before, the role of the adviser in supporting investors in making the right decisions has never been more critical, says Dynamic Planner’s CEO Ben Goss.

With clients likely focused on their physical health, advisers are playing a crucial role in protecting not just their financial futures but also their overall mental health and wellbeing in the longer term.

To support advisers, Dynamic Planner has created an ‘Investment Uncertainty Checklist’ outlining four key talking points to support concerned clients (see below).

Be led by the science
Corrections, crashes, and crises happen. While they happen for different reasons and are unsettling, the history and social scientific study of stock market cycles tells us to expect a recovery.

Remember the review planning process
The long-term return expectations used to build portfolios incorporate the potential for extreme events. Sticking with the plan means clients should be in the best position to achieve longer term objectives.

Focus on risk-based benchmarks, not high-profile indices
Diversification offers the best chance of mitigating the more extreme losses of individual markets and positioning portfolios in the right areas for the upswing when it comes. Risk-based benchmarks are the best comparisons.

Stay invested
History tells us that clients that stay invested for the duration, even through the turbulent times, do better than those who do not. The most successful strategy is to stay invested, think ‘time invested’, not ‘timing of investment’.

Goss says: “The social science of economics has studied the rise and falls of stock markets for hundreds of years. From Tulip Mania (1604), World Wars, the Spanish Flu (1918), The Great Depression, the 1970’s Oil Crisis, 1987’s Black Monday, the Dotcom Crash and the Great Financial Crisis (2008/9), while the cause of each were different, the recovery came and growth restarted.

“However, when investment risk shows itself in a client’s portfolio, and with a backdrop of such negative news, it is understandable that for some it may be tempting to exit. This is where advisers really come into their own – and those conversations between adviser and client, can be the critical difference between feeling anxious and acting. The support that advisers are giving clients today will help their prospects tomorrow, not just in terms of their financial wellness, but their overall wellbeing too.”

Further Reading

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