In this category you will find blog posts with tips and shared wisdom about investing. Some posts are from Don Connelly’s experience in general and others are prompted by real-life people questions to Don.

How to Keep Clients Motivated and Stop Them from Making Bad Decisions

How to Keep Clients Motivated and Stop Them from Making Bad Decisions

According to leading psychologist Danial Kahneman, people often form responses instinctively – accepting the first judgement that comes to mind. When left to own devices, we’re apt to make poor decisions based on fallacies or personal biases. And this is never truer than when it comes to investing.

The greatest challenge faced by any financial advisor is that of keeping clients invested for the long term. When the markets are down clients become anxious – they instinctively want to move their money out. Alternatively, they may want to start chasing ‘hot stocks’ in a bid to boost performance. Either way, they’re at risk of abandoning their long-term financial plan.

It’s your job to step into the breach and stop clients from making bad decisions. You need to act quickly to keep them invested.

Here’s how to stop clients from making bad decisions and help them stick to the plan – no matter what the market conditions are.

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Teach Your Clients Not to Watch The Evening News

Teach Your Clients Not to Watch The Evening News

In our increasingly information-driven society, it’s your job to teach clients not to believe all they hear. They need you most of all when they’re being bombarded with negative news about the markets. Being exposed to excessive information without anyone there to guide them could see your clients making bad decisions regarding their investments.

Here are a few ideas how to make sure your clients stick to the plan despite what the media say.

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The Greatest Challenge Any Client (and Therefore You) Will Ever Face

The Greatest Challenge Any Client and Therefore You Will Ever Face

Sticking with the plan despite tough market conditions is the greatest challenge both you and your clients will face. That sudden drop in cabin pressure when the markets fall is the acid test of your relationship building skills. If you aren’t prepared ahead of time, neither will your clients be.

Whether your clients will stay the distance depends on you.

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Put Investing in Terms That Clients Can Understand

Put Investing in Terms That Clients Can Understand

Everyone knows that cars go down in value. That’s just the way it is. No matter what you pay for a car, and no matter how carefully you look after it, it’s going to be worth a lot less than you paid for it. It’s never going to bounce back in value, but car owners are okay with that. They are pre-conditioned to the loss. However, clients don’t see their investments this way. They think investments are only supposed to go one way – up. When investments go down, clients feel they have lost money, even if they have not sold out. They will take a hard loss on a car and not bat an eye, yet they can’t stomach a paper loss in their portfolios.

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Remind Your Clients Investing Is a Marathon

Remind Your Clients Investing Is a Marathon

Despite regular and sometimes frightening dips markets continue to rise incrementally over time, continually setting new highs. The problem is that many clients disbelieve this; they panic when the market temporarily falls. As their financial advisor, it’s your job to keep them on track.

You need to get them over their short-termism and make them see that their focus should be on 20, 30 or 40 years from now – not on this afternoon or next week.

Use all the tactics at your disposal to illustrate that investing is a marathon not a sprint.

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Educate Clients What It Really Means to Invest

Educate Clients What It Really Means to Invest

No matter how inherently intelligent your clients may be, never assume they have a clear understanding of what ‘investing’ really involves. For many people a financial plan consists of having money in an account that continually goes up in value. To them, a share of stock is a lottery ticket, no more and no less.

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What If Clients’ Sentimental Equity Holding Doesn’t Match Their Risk Tolerance?

Don Connelly audio blog post

Today I’d like to share with you an email I received a while ago from Mike at Edward Jones. ¨What is the best way for an FA to approach a client about an equity holding that has sentimental value to the client but does not fit their risk tolerance? I have a 75-year old widow with over 50% of her net worth in Disney stock. I also have a widow who inherited her husband’s IRA at another firm. She had no idea what was in it, it was with an advisor she doesn’t know. Turns out it is 60% in aggressive investments, but she still wants to keep it there. Help.¨Listen to Don’s answer or read the transcript.

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