5 Steps for Advising Retired Clients in a Down Market

2. Keep things in perspective.

While you want to listen to your client’s concerns, you also need to be their rock-solid voice of reason as well. Use your experience and knowledge of the markets to help these clients view this down market in perspective.

Even though we’ve only had one down year for the S&P 500 since 2008 — the height of the financial crisis — bear markets are not uncommon. A bear market is defined as a drop of 20% or more for the index. According to Ned Davis Research, there have been 14 bear markets between 1945 through 2021, or one about every 5.4 years. The last one was the brief — but steep — market decline in 2020 at the onset of the pandemic.

Your retired clients may wonder what a downturn at this stage of their life means for their ability to maintain their lifestyle in retirement.

A discussion about the fact that bear markets occur with some regularity, and how their plan is designed to provide a level of protection during these periods, can be a good idea to help clients keep this and future market downturns in perspective.

For clients that you have worked with for a number of years, show them that although the markets are down and their portfolio may have taken a short-term hit, they are still in good shape overall — assuming this is the case. Show them where they sit currently versus five or ten years ago. Show them that they have liquid assets to meet their current cash flow needs without having to sell equities at a reduced market value.

(Image: Adobe Stock)