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How to Keep Clients Investing in Uncertain Times

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A recent study conducted byInvesco and Cogent found that, of the 206 RIAs surveyed, 99 percent listedmarket volatility as one of the top three concerns for their clients. Fully 70percent listed it as the number one concern, followed by 45 percent who listedmanaging risk in portfolios as their top worry. Among recent reports of low andslow growth over the coming year, many advisors are wondering how they can keepbattered clients investing their money. There are a variety of ways to encourageclients investing in their financial futures.

For the Risk-Averse Investor
Your clients are probably scared of taking any major risks, and who can blamethem? Risk is a natural part of investing, and they can reduce their risk byselecting “safer” investments. However, are these investments the best choices?Sit down with each of your clients and explain to them the risk level of their currentasset allocation. Show them the average growth of portfolios at similar, higherand lower risk levels. Typically, investors that take higher risks have higheraverage gains. Loss will happen, but it doesn’t mean that investing in “safer”options will result in the highest or steadiest portfolio growth.

For the Anxious Participant
Clients and participants experience less anxiety when financial advisors communicatewith them regularly. If they know what is going on, investors will likely feelmore confident and may contribute more to their retirement accounts, evenduring uncertain economic times.

For Those Who Don’t Want to Invest Right Now
Many investors’ portfolios took more than a few hits in the last year, but thatshouldn’t reduce the amount of contributions that participants make to their401(k)s or other investment accounts. Of course, they may still sustain lossesthis year, but those losses are nothing compared to missing out on afinancially secure retirement. Skipping even one year of contributions canpostpone retirement by a few years.

Due to recent volatility,investors are uncertain of their financial futures. This has left manyrisk-averse and not wanting to contribute to their retirement accounts. Somesee investing now as simply throwing away their hard-earned money. However, byexplaining risk and asset allocation, by communicating regularly with clientsand by encouraging participants not to miss contributions, financial advisorscan keep clients investing in their futures. 

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