17. Joe Watson, Janney Montgomery Scott Mt. Laurel, N.J.
I entered the financial services industry in 1984. By 2008, I had lived through all types of markets. During the financial crisis of 2008, diversification and risk management were put to the test. The events of 2008 proved the importance of the following strategies:
-Be alert for bubbles in various asset classes.
-Be diversified and try to hedge your risks.
-Understand that in times similar to the Great Recession, multiple asset classes can get hit simultaneously.
-When a financial crisis happens, do your homework and formulate a position. Then communicate with your clients this is when your services are most needed.
-Have a written contingency plan, and adapt it as needed to the developing circumstances.
-Offer clients a three-part scenario: worst case, best case, and most likely. Your guidance should help bring clarity and order to the situation.
Finally, its important to be a student of economic history. Bubbles and financial crises have been with us throughout time. Never underestimate their impact as we know there will be more in the future.
18. Ruth Kitzman, RBC Wealth Management -- Milwaukee, Wis.
The financial crisis five years ago truly should have reminded all of us how important it is to have our "house" in order. By "house" one could include debt, investments, diversification and risk tolerance to list a few items. Communication has been key. Staying in contact on a regular basis with clients is of utmost importance I believe. Talking to the clients once every five or more years just doesnt cut it for either party - the financial consultant or the client. It seemed to me, although the market was moving all over the place, the clients understood why the statements read the way they did. As a result, some needed to review their risk because talking about it and seeing it provided a bit more reality. It made things more "real" to the clients. It most certainly has made them more aware that the markets do move around and diversification is key within their risk level tolerance.
19. Robert Clark, Janney Montgomery Scott Danvers, Mass.
When bull markets last for longer periods, clients often believe they can tolerate more risk. Instead of worrying about their financial goals, they start tracking their portfolios relative to an index. Targeting an index such as the S&P 500 may seem smart when the market is rising, but I have yet to meet a person who is thrilled when the index is down 37% and theyre down only 36%. We spend a lot of time reminding clients that the purpose of investing is to fund the financial goals theyre trying to achieve: retirement, a vacation home, or a family legacy.
When the market is doing well, it makes sense for retired clients to set aside enough cash to cover spending for the next 2-4 years. That way, if a bear market then follows, they will likely have enough cash on hand to allow their equity investments to recover. We also remind clients that diversifying their investments for the long-term is critical to minimizing risk.
Finally, we have discretion in managing most accounts. This allows us to proactively make portfolio adjustments to the satisfaction of our clients in what can be deemed a fast-moving and emotional market. As always, communicating with clients is essential to helping them through market fluctuations, both good and bad. Were here for them through the ups and downs, to keep them anchored and focused on building and preserving their wealth.