Wednesday, June 10, 2009

What do you say to investors when their money has gone?

What on earth do you say to investors who are near retirement and find themselves with half their capital gone thanks to global market volatility? Or worse, poor investment choices?

Fund managers, financial planners and superannuation providers are answering these questions now, and will have to keep answering them in the future.

There's no easy answer. There's no doubling the lost dollars to magically take investors back to where they were.

So how about a simple but challenging answer?

Markets go up and down. When and how they will do that is something you, I, and most professional investors, cannot pick. So invest now for the long term with full knowledge of the short term risk you run. Think very carefully about what you are prepared to lose, or what you can do without for a very long time - perhaps ten years.

And understand a little about investor behaviour - how you might react when it gets scary. We typically buy and sell at the 'wrong' times because we panic - even though we know this basic info about markets.

Forewarned is surely better prepared...although it might be a while before some of us get to use that knowledge.

It's what those with a long term focus have been saying for as long as I can remember funds management marketing...which is since the early 90s.

It's not new. It's not sexy. It's not different to your competitors. But it appears to have been proven right - again.

What can be new, different and if not sexy at least real, is HOW you say that now.

The "how now" is all about humility, understanding and realism. Doing that well takes a good understanding of your audience - the real people you are talking to.

Communicating well now also takes a long term commitment - which comes from deep inside your organisation - because as a company you believe an informed investor is better off as well as being a better client.

1 comment:

  1. very true......

    building long term wealth doesnt have to be complicated and it doesnt have to be based on forecasting.


Thanks for reading. Constructive and relevant comments welcome!