March 1, 2023 | Vanguard Perspective
Market turbulence is Advisor's Alpha weather
Last year was a bear, for both you and your clients. At the same time, volatility provides you with an opportunity to add value by acting as a behavioral coach, helping clients improve their chances of success by sticking with their investment plans.
Vanguard recently created the Investment Advisory Research Center, to provide you with insights, resources, and best practices around managing your clients' emotions and expectations. To help you help your clients, we created a short, compelling video that demonstrates how failing to remain invested during certain selected periods of significant underperformance might hypothetically have cost your clients over the long run.
The video is at the bottom of the page. Simply right-click and save it in order to send to clients.
That said, our research (see Additional Resources, below) shows that staying invested is difficult: Most investors have not simply shrugged off down markets, or bought into them in order to rebalance their portfolios.
Giving clients this important context is not only a powerful teaching moment, it's also a way to elevate the value of your practice.
The future is uncertain, to say the least. However, we do know this: Markets will continue to occasionally go down, sometimes dramatically, making your job harder and client conversations tougher.
Whatever the future holds, Vanguard's Investment Advisory Research Center is here to help you and your practice navigate it.
Additional IARC resources:
Putting a value on your value: Quantifying Advisor's Alpha
Vanguard’s Advisor’s Alpha: People with portfolios
Ways to help clients understand market downturns
Managing market volatility for your clients and your practice
The case for Vanguard strategic model portfolios in volatile times
Notes
- All investing is subject to risk, including the possible loss of the money you invest.
- Diversification does not ensure a profit or protect against a loss.
- Investments in bonds are subject to credit, interest rate, and inflation risk.
- Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
This article is listed under
Advisor's Alpha