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.

Should FAs Allow Clients’ Political Opinions to Influence Their Investment Decisions?

Should FAs Allow Client's Political Opinions to Influence their Investment Decisions?

Here we are again—another presidential election year. If it’s like the last couple of elections, financial advisors are sure to see some clients wringing their hands over which candidate will win the White House and how that will impact the financial markets and their investments. At the very least, you’re likely to get an earful of some clients’ political viewpoints—which is fine if they don’t try to correlate them with how they should invest their money.

For decades, investors have tried to find some correlation between elections and investment performance, hoping it will foretell how a particular outcome will impact their portfolio so they can adjust their investment strategy appropriately.

Of course, if you search far enough, you might be able to uncover data that supports such a link. But you’re not going to find any that decisively shows a causal relationship or enough of one to warrant serious consideration for changing investment strategies based on election results. Still, some clients have such strong political views that they see a connection in all aspects of their lives, including how they invest their money.

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Current Events Are White Noise

Current Events Are White Noise - Don Connelly video post

Seemingly each day, the media hysteria heightens. You’d think nobody would want a steady diet of bad news, but you and I know that it’s not going to stop. Why? Because bad news sells.

Do you ever wonder why bad news sells? Do you ever wonder why we focus on what’s wrong in the world? We do that because we’re concerned about anything that threatens our sense of wellbeing.

Watch this video or read the transcript below to learn why we do that and what you and your clients should focus on.

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6 Essential Investment Tenets to Instill in Your Clients for 2024

6 Essential Investment Tenets to Instill in Your Clients for 2024

The stock market has taken investors on another wild rollercoaster in recent years. The market recovered from a bear market in 2022, and after a solid up year in 2023, there’s bound to be another one at some point. Going into 2024, the market will keep investors guessing, which is why helping your client maintain a long-term perspective is essential.

We can’t know what stocks will do today, next week, or next month. But we know that, over the long term, stocks will continue their century-long advance. Reacting to short-term swings in the market means moving in and out of the market at the wrong times, locking in permanent losses, and often missing out on the biggest gains in the market.

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It’s Time to Have Another Conversation with Your Clients About Risk

It’s Time to Have Another Conversation with Your Clients About Risk

With the stock market setting its sights on new highs, is it time for advisors to have another serious conversation about risk? 

With all that is going on across the globe—war in Ukraine and the Middle East, persistent inflation, rising interest rates, a looming recession, and a divided government likely headed to another fiscal cliff—the stock market appears to be climbing a wall of worry. But how long can that go on? When will it end?

As the market nears new highs, that is the question being asked with increasing regularity by market analysts, media pundits, nervous investors, and financial advisors alike. While the question is palpable, the answer is not so obvious.

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When Markets Are in Transition

When Markets Are in Transition

The stock market is not static. It’s always in transition, more often than not triggered by economic uncertainty.

Listen to this 1-minute audio or read the transcript below to hear an idea about calming clients’ fears and refocusing them during times of uncertainty.

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How to Talk to Clients About Market Volatility

How to Talk to Clients About Market Volatility

You don’t hear people talk much about market volatility until stock prices suddenly sell off. But when your clients watch their portfolio value decline unexpectedly, it can be terrifying, leading many to make potentially costly mistakes, such as selling into a steep market decline. Though we’ve experienced many volatile markets over the last 20 years, advisors must help clients understand that volatility is not their enemy.

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Financial Advisor Do’s and Don’ts During Extreme Market Volatility

Financial Advisor Do’s and Don’ts During Extreme Market Volatility

Financial advisors play a vital role in helping clients achieve their most important financial goals. But where they really earn their fees is during times like these, when helping clients navigate the choppy waters of extreme market volatility. Clients look to their advisors to guide them through scary times and reassure them that everything will be okay.

Emotions run high when the market turns volatile. When stressed, humans instinctively want to do something and take some kind of action to reduce or eliminate the threat. That’s when mistakes typically occur. The value of a financial advisor rises in direct proportion to the anxiety levels of their clients, who look at volatile market swings as a threat to their financial security. The critical role of financial advisors is to keep their clients from making costly behavioral mistakes. During periods of extreme market volatility, there are some things advisors must do and things they should avoid doing to maximize their value to their clients. Here are a few.

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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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