Have you ever been in a situation where a client says they don’t like the performance of their funds? A client may speak to a friend about returns or read something in the media and then suddenly they think their portfolio is underperforming.
Usually, it isn’t if the portfolio has been built consistent with their tolerance for risk. We can always find a better returning fund but could the client endure the increased volatility that comes with higher long-term returns. Probably not.
One way I’ve dealt this this in the past is make sure I always have the benchmark returns with me. Therefore, the client has a something to compare their returns against rather than just throwing a number out.
Here’s what I’ve used in the past. It’s the monthly economic update from Industrial Alliance. Apart from the commentary and their own funds’ returns, at the end of the document the market index performance is displayed. These figures will give you a foundation to use in your discussion with your client.
Usually, the emotional response to fund returns can be managed by reminding your client of their risk tolerance and using facts to judge fund performance.
As always, I look forward to your comments.
Director of Wealth
Qualified Financial Services
416 786 4140
PS US markets are near record highs, so for your clients with contracts that have the manual reset option, why not check to see if you can lock-in these gains?