Tracey Evans: Coaching clients through a storm of bad news

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Sep 05, 2019
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With the Office of National Statistics stating the UK economy shrank 0.2 per cent between April and June 2019, but having grown by 0.5 per cent during the first quarter, this could be a sign the UK economy is faltering. This is our worst economic performance since 2012 and another negative quarter would technically put the UK in recession.

Writing this in August, we have seen global markets stumble and we are all holding our breath in case this becomes a flavour of things to come. We all know too well the anxiety that can come from clients during these periods of market and political uncertainty we are seeing at the moment.

As an adviser with over 30 years’ experience, I regularly draw on history over this period and remind clients they still need to play the long game and unless something has materially changed to their circumstances they should consider waiting this out, even if it feels uncomfortable.

Tracey Evans: Saving youngsters from financial and emotional fallout

However, we all know how emotionally receptive we are about bad news and this plays on our minds far more than good news. Bad news sells more and our negativity bias has us on high alert meaning we react or overreact more quickly. This is because the hurt from losses affects us far more than the happy feeling when gain are made. This makes the role of an adviser in these tricky times even more important, especially when you get nervous or anxious clients who on the whole need a reassuring voice to tell them everything will be OK in the long run.

I call this playing the long game and that investing is a long-term endeavour. Some of my top tips to clients in these difficult times are as follows:

  • Embrace the uncertainty of markets – I remind clients that’s what delivers them with strong, long-term returns so look beyond the short-term numbers.
  • Don’t look at your portfolio too often. Once a year is more than enough in my experience, although we all know clients who look at their portfolios almost daily!
  • Accept you cannot time when to be in and out of markets – it is simply not possible. If it was, everyone would be able to time when to go in or out and there would be no investment market!
  • A fall does not turn into a loss unless you sell your investments at the wrong time. If you don’t need the money, why would you sell?
  • Falls in the markets and recoveries to previous highs are likely to sit well inside your long-term investment horizon and, more importantly, your long-term objectives.
  • Remind your “as your adviser I’m here to talk to you.” I regularly act as my client’s behavioural coach to urge them to stay the course and not get bogged down with financial reporting. I regularly suggest they tune out the noise and stop reading financial press as it can make even the most sensible investor make the wrong decisions

Most importantly, don’t panic and don’t make any rash decisions. Play the long game.

Tracey Evans is associate director at Progeny Wealth

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