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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How to Build Your Story-Benefit Matrix

How to Build Your Story-Benefit Matrix

Last week I blogged about a useful sales tool called a story-benefit matrix, and why you should develop one for your practice. Just going through the process is beneficial: It forces you to think through a number of different ways your prospective client will benefit by working with you – and gives you an opportunity to help tell an illustrative story that will cement that case.

It’s basic “soft-skills” at work.

But it’s helpful to understand how to build one yourself, so let me help you with that.

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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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5 More Questions Prospects May Ask You before Deciding to Hire You as Their Financial Advisor

5 More Questions Prospects May Ask You before Deciding to Hire You as Their Financial Advisor

Choosing a financial advisor is a big decision for potential clients, especially if they’re new to the world of investing. Not only will they be looking for someone suitably qualified, they’ll be searching for someone who shares their goals and comes across as caring and authentic.

To try and deduce whether you’re the right fit for them, they’ll undoubtedly have questions. In this follow up to a previous post, let’s look at 5 more questions you may get asked in that first meeting.

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How to Prepare Your Clients for The Next Market Correction

How to Prepare Your Clients for The Next Market Correction

The Natixis Investment Managers 2018 Global Financial Professionals Survey revealed that 57% of advisors believe investors are unprepared for a downturn. This illustrates how difficult it is to convey the nature of turbulence to clients – and that volatility is an unavoidable part of the investment process.

Take the lead – prepare and educate your clients on the nature of market volatility. Then it will be far easier to counter their anxiety when the next market correction comes.

Here are 5 things you can do right away.

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How to Prepare Yourself for Market Corrections

How to Prepare Yourself for Market Corrections

Stocks will edge higher, sometimes for prolonged periods of time, but this should never give rise to complacency. Because there’s always a ‘bear market’ waiting just around the corner.

Don’t get caught out when the markets start to fall. Prepare yourself in advance, both for your own peace of mind – and so you’re ready to reassure clients that there’s no reason to panic.

Here are some things you can do to make sure you’re in command when market corrections take place.

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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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4 Misconceptions about Market Volatility Your Clients Need to Be Aware of

4 Misconceptions about Market Volatility Your Clients Need to Be Aware of

As a financial advisor it’s your responsibility to get your clients to stick to their financial plan for the long term. This means you’ll need to change any pre-conceived notions they may have about market volatility. In particular, you need to get across that volatility does not equate to risk or loss.

Here are some common misconceptions about market volatility your clients may have and how to address them.

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4 Things Clients Need to Know about Volatility

When markets are volatile investors can get spooked and start to question their investment strategies. Especially if they’re new to the process of investing. This could prompt them to withdraw from the market and wait on the sidelines until things get better.

As their financial advisor you’re there to help them see things in perspective. By helping them understand the nature of volatility they will find it easier to stick to their plan.

Here are four things about volatility you need to explain to them right away.

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