This post was authored by Salvatore M. Capizzi, Dunham's Chief Sales & Marketing Officer. If you have questions concerning today's topic, please call us at (858) 964 - 0500. Hold us to a higher standard.

Dear Valued Financial Advisor,

As a professional in our noble industry, I have lived through about a dozen fear-laden markets.

If fear and greed are true drivers of short-term market volatility, we are definitely in fear mode right now. In fact, no single word seems spoken more today than the word “fear”. I hear it constantly when I listen to news and podcasts about the coronavirus and, more recently, the markets.

We have all dealt with market, economic, or geopolitical events and the fear they may cause. Generally, this fear is the perception of the current and future risks these events bring to clients’ investment portfolios.

However, as financial advisors, we must recognize that there is an element to this fear that goes beyond their investment portfolios. The added fear revolves around the risk and danger of the actual coronavirus and its possible effect on their family and themselves. I believe that portfolio risk and personal danger may be melding into one.

This is why we need to be cautious. When clients have market anxieties, our mentors taught us to assuage their fear by telling them to do things like going home and turning off their television. However, because of the personal nature of their total perceived fear and danger concerning this virus, I would be careful with this approach.

Here are six things to think about when working with anxious clients concerning the virus and their portfolios:

1. Be empathetic.Do not admonish or criticize them for having anxieties about their investments or the virus. Keep in mind, to them, this feels different.

2. Let them say their piece. Let them express their fears. Every one of them. Do not interrupt or use phrases like, “you really need to relax about this”, or “you really need to calm down”. Let them talk.

3. Do not dismiss their anxiety. Do not suggest that they are irrational or that they have fallen into the trap of the media. Be certain they know you understand what they are feeling.

4. Be their financial advisor. You are not their therapist and likely do not have the credentials to be a therapist in this situation. However, you are their financial advisor. Once they know you have listened and you understand what they feel, be their financial advisor. You accomplish this by letting them know you understand the markets, that it is what you were trained to do, that you have studied and continue to study the markets, and you have a firm view on what is going on, what to do, and why.

5. Calm, Steady, and Common Sense. Be certain that they understand that, based on your experience, you stay calm in markets like this, you stay steady in your work and in your research, and your superpower is your use of common sense in times like this.

6. Above all, you should not take the current results in your client’s portfolios personally.You have heard me say countless times that markets move in cycles, generally in large chunks, and in short time periods. This is just another example of this. The truth is there is nothing you could have done to prevent the virus and its effect on the market. Do not take losses in your client’s portfolios home with you. As experience has historically shown us and as past market cycles imply, the returns will get better.


To help you with your client conversations, we are providing you with our Market Cycle Chart. This is a great illustration to share with your clients because it explains how markets generally move in cycles, typically in large chunks, and over short time periods. It clearly shows the detriment of emotional market timing and the benefits of staying calm.

Click the hyperlink to receive a copy of Dunham's Market Cycle Chart.

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