Understanding and overcoming clients’ fears is among the biggest challenges financial advisors face in trying to manage client portfolios successfully over the long term. Too often, emotional responses to negative financial or economic news and other perceived world crises lead to “fear trades” that cause client portfolios to lose value and derail carefully planned wealth management strategies.

The result is not only that the average investor portfolio underperforms almost every index and asset class, but also that he or she cannot even keep pace with inflation, which has been very low for a long time.

Advisors who hope to manage client fears through times of negative news and perceived crisis may wish to have a conversation with them about the principles of sound investing: consistency, courage, and balance. Adhering to these core principles is likely to help keep wealth management strategies on course, provide a buffer to the daily media drumbeat of doom and gloom, and help clients stay “buckled in” for the long term, even in times of turbulence.

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