Tips for Clients During a Market Meltdown

Jay Gershman |

Amid continued concerns over the coronavirus and stock market volatility, we want to communicate clearly to clients that, in the vast majority of cases, it remains crucial to stay on course with their retirement portfolios. Communicating is key in order to reduce stress and remind clients of why they have a plan in the first place. If you’ve invested to the appropriate risk tolerance level, then it’s likely you’ve managed fairly well, despite some losses in certain cases. What we stress to clients is that despite the current crisis, your long-term goals haven’t changed, and neither should your investment portfolios. 

Staying Level-Headed

The conversation we have with retirement plan participants under normal circumstances, is usually a positive and “forward-looking” one in which customers typically ask how much they should be saving for retirement and where they should put their money. However, due to the circumstances, you may be worried about what’s going to happen with your investments. This can be a hard conversation to have as retirement is a goal people spend years working towards. The overall discussion we’re focusing on is your timeline and risk profile. 

By understanding these components, for most clients their time horizon isn’t different than it was three months ago and their risk profile isn’t necessarily different either, the atmosphere of the market has just changed.  From what history has shown, if you’re not retiring in the next couple of years, there’s time to let things recover. Staying level-headed and focusing on long-term strategies can make a difference in how we handle the ongoing situation together. 

Opportunities Ahead 

What we want to stress to clients is that they should try not to fall victim to buying high and selling low. There’s a natural human reaction to want to act on what’s happening in the moment, but selling after a large fall is a long-term mistake for most people. It’s important to remember factors such as your risk profile and time horizon when investing rather than current market conditions. 

We also stress to our clients that it is best to keep contributing to their 401(k) and other retirement plans because by doing so clients will be buying into the market at a lower average purchase price. It's easier said than done, but it’s important not to fear the bear market. Now is the time to focus on what we can control and mitigate risks related to what we can’t. It’s important to keep investing goals, risk tolerance and time horizon in mind before taking action. Times like these remind us why investors should actively review asset allocations to determine if they still align with plans. While we can’t control financial markets, we can adjust strategy accordingly.