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.

Convincing Clients of the Futility of Market Timing

Convincing Clients of the Futility of Market Timing

We will probably never admit it, but most of us are lousy timers, and, of course, none of us can predict the future. How often have you tried to shift your way through stop and go freeway traffic to end up in the slowest lane again? For investors who try to time the market, the actual costs of underperformance and lost opportunity are invariably greater than the potential benefit.

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Helping Clients Understand the Normalcy of Market Corrections

Helping Clients Understand the Normalcy of Market Corrections

As a financial advisor, you work closely with your clients to craft investment strategies tailored to their objectives and risk profiles, and then monitor them over time. That very well may be the easy part of your client relationship. The more significant challenge you have as an advisor is to make sure your clients stay the course with their strategy even in the midst of a steep market correction.

One of the primary responsibilities of a financial advisor is to convey to their clients that the only concern they should have about a market downturn is not how deep it falls or how long it lasts, but how they react to it. After all, no one can predict when a market correction will occur, but we know that it will. After the longest bull market in history, clients tend to forget that stock prices can go down as well as up, and that market corrections are quite normal. That confers upon advisors the responsibility of educating their clients on the inevitability of market corrections and how they should react to them.

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How to Assure Clients That Volatility Is Part of the Strategy

How to Assure Clients That Volatility Is Part of the Strategy

Unquestionably, the stock market has experienced extreme volatility in the last couple of years, elevating the anxiety levels of investors who grew complacent throughout a historic 11-year bull market. Just as they did throughout the wild gyrations of the 2008-2011 market, investors have grown intolerant of the recent, wild stock market gyrations, resulting in many choosing to make wholesale changes to their portfolio, switch financial advisors, or flee the market entirely.

But, what investors may not understand is that switching between asset classes to avoid volatility can actually have the opposite effect. It is incumbent upon financial advisors to help their clients understand that, with a sound investment strategy and a long-term perspective, volatility can actually be good for a stock portfolio because it has always been the primary force that drives market gains over time.

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Making Sure You Make the Most of Market Uncertainty – What Advisors Read the Most on the Blog

Market Uncertainty – What Advisors Read the Most on the Blog

As you very well remember, we had a quick and severe market downturn in March and April, followed by the greatest stock market rally in the history of the stock markets. Naturally, clients are panicked because of the market uncertainty. Regardless of where the DJIA closes today, we know for a fact that there will be another bear market – we just don’t know when.

To help you prepare yourself and your clients for what inevitably lies ahead, we bring you the top 10 most-read posts on the topic of market volatility, falling markets and growing your business in a post-pandemic world.

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The Clock: A Great Sales Idea to Overcome Irrational Pessimism

The Clock: A Great Sales Idea to Overcome Irrational Pessimism

You may have heard me talk before about my good friend and successful Advisor, Mark Dick. He once said to me that ‘dividends are tangible evidence that good companies don’t use smoke and mirrors because dividend checks don’t bounce.’ That is a strong power phrase that gave me a great sales idea.

Listen to the audio episode or read the transcript below to learn what the clock sales idea and how to use it.

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Reasons Clients Need a Financial Advisor – Overcoming the Do-It-Yourself Objection

Reasons Clients Need a Financial Advisor – Overcoming the Do-It-Yourself Objection

We’ve all encountered them: The prospect or client who wants to go it alone. They want to manage their own portfolio.

Well, here’s one approach you can use:

First, ask the question, “Can I share something with you?” (I like this phrase because it’s non-confrontational. It doesn’t activate the prospect’s ego, leading to an argument you can’t win. It neutralizes it.

Then you can show them the latest DALBAR study.

It doesn’t matter much what year you use. The results for individual DIY investors are almost always dismal: According to the 2019 DALBAR Quantitative Analysis of Investor Behavior, the typical do-it-yourselfer achieved an annual real return of just 1.71%.

Compared with the S&P 500, do-it-yourself investors lagged the S&P 500 by huge margins:

• 4.35 percentage points, annualized, over five years;
• 3.46 percentage points, annualized, over 10 years;

The reason: Bad market timing decisions. People pile into the market at the wrong times, and then they panic and sell at the wrong times.

Why? Because people are irrational, and are hardwired to make sub-optimal decisions.

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Coronavirus: An Opportunity for Financial Advisors to Strengthen Client Relationships

Coronavirus - An Opportunity for Financial Advisors to Strengthen Client Relationships

As I write this after the market close on March 9th, 2020, the Dow Jones Industrial Average is down 1,800 points on the day, for a loss of 7.8%. The S&P 500 is down by 7.6% – the worst single day on for U.S. equities since the 2008 crisis.

This Monday loss follows some significant volatility late last week that already had a lot of investors on edge.

No doubt, most of you advisors out there are receiving some nervous calls and emails from your clients, wondering what’s going on.

This is where great advisors can earn their money. As a matter of fact, you as financial advisors may well not have as great an opportunity to add value for your clients for a very long time as you do today.

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A Reminder: The Trend Is Your Friend

Don Connelly audio blog - AskDON

I get asked a lot if I coach Advisors and the answer is “No, I don’t coach. I remind.” Literally. I think teaching is showing someone how to do a job. Coaching them is showing them how to get better. I think you get better by going backwards, by going back to the basics, so let me give you the most basic investing thought I can give you.

Watch the video or read the transcript below to learn the most basic investing thought and why the trend is your friend.

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Three Things That Clients Often Do – Even Though They Shouldn’t

Three Things That Clients Often Do – Even Though They Shouldn’t

During your career, you’ll find over and over again that emotions cloud clients’ investment decisions – clients are not always inclined to act in their own best interests. At times like these you need to step in and be a behavior coach for them – otherwise they’ll end up regretting their decisions down the line.

Here are three things that clients want to do – but shouldn’t, and how to counter them.

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