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Harnessing The BEAT: What's Your Volatility Thesis?

By David RichmanManaging Director, Advisor Institute

You may be familiar with our Four C's of Client Communication in Turbulent Markets: candor, clarity, commitment and calm. However, my long-held view of the importance of our four C's may be missing something very significant: Context.

With the S&P 500® and the Dow chalking up to an ugly week on September 6, how can you provide clients context for what it means about their portfolios? In three important ways:

  • None of you clients likely own the S&P 500® or the Dow itself. If you've brought a diversified approach to their portfolios, their personal downdraft may be a far smaller percentage.
  • Look at the charts for market performance to see how many days of an upmarket have been retraced. It's a really good way to keep context in check.
  • Articulate your thesis—a timely, pithy sound bite that connects the dots to the advice you're delivering.

We turned to the September issue of The BEAT for thesis inspiration: Today's volatility is about unwinding crowded positions not unwinding fundamentals. According to Jim Caron, CIO of the Portfolio Solutions Group:

"Today's market volatility is tomorrow's opportunity as weakness in September is typically followed by strength in the months that follow."

Providing sound counsel and context can help alleviate your clients' fears, despite the headlines surrounding today's market volatility.

Bottom line: Clients are looking for some perspective from you right now. Add "context" as the fifth C to your client communications approach in the weeks ahead.