Clients have a million questions for their advisors ranging from how best to time the market to what they should do to limit further damage to their portfolio. How do advisors ensure clients are actually grasping the concepts and are playing an active role in making investment decisions?
To help, enter the latest resource from YCharts: The Top 10 Visuals for Clients & Prospects. This free slide deck is filled with informative visuals that illustrate key concepts that often come up in many client and prospect conversations.
Download the free Slide Deck for more insights:
There’s Always a “Reason to Sell”. But Should You?
Since October 1989, the S&P 500 has posted a 2,100% total return (including dividends). Put differently, the index has grown an average of 9.73% each year for over 30 years. While there have been a number of events that have led to significant declines, the market continued to climb higher over time.
During periods of steep drawdowns, investors are thinking of one thing: capital preservation. Client emotions will run high with their life savings or retirement at stake. In these moments, advisors are in a unique position to address their clients’ concerns while making sure they understand that short-term losses do not necessarily dictate long-term success.
The Power of Staying Invested
Using an initial investment of $100K in the S&P 500 since 2003 as an example, individuals who kept their money in play for 20 years saw a 9.79% annual rate of return compared to just 6.82% had they moved to cash for a year at the bottom of the 2008 Financial Crisis. While investors may have felt good about the move at the time, in retrospect, many will be beating themselves up for not staying the course.
It’s natural for clients to want to minimize losses short-term, but advisors need to educate their clients on the importance of riding the wave of volatility to achieve their long-term goals as the market’s best days often occurred during periods of volatility.