August was a rough one for stock market investors – no doubt. This should not have come as a great surprise, however, as August is usually volatile, with many traders on vacation and volume typically very low. And this year the economic slowdown in China and concerns over when the Fed will tighten added to the overall level of anxiety and uncertainty.
Hopefully, you have already communicated to your clients the value of patience and of not exiting the market in a panic. But your job is not done. September and October are usually bumpy months in the market as well; witness what has happened this week already.
If this week and history are any indication, clients are going to need to be reminded again (and perhaps again) of the need to remain patient and focused on their long-term objectives.
But make no mistake – your job is not to get caught up in the turmoil and to commiserate with clients and help them feel sorry for themselves. Your job is firmly hold their hand (at least figuratively), be somewhat sympathetic, but more importantly be the voice of reason and rationality. Your job is also to educate, and to reinforce the fundamentals of the market that you have instilled in them.
Here is one of the best charts that I have seen to keep clients focused on the long-term. Use it, and other similar materials to calm clients and demonstrate your value added to them. This more than anything will prevent them from doing the wrong thing, and ensure that they remain clients for the long-term.
