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We speak with many advisors who believe the April swoon was likely a small dose of the kind of volatility to expect in the days ahead, yet few have taken many steps to act upon their predictions.
Perhaps you’re familiar with Warren Buffet’s Noah Rule, which was first published in a 2001 Berkshire Hathaway annual shareholder report:
“Predicting rain doesn’t count, building an ark does.”
While Buffett’s reference to the Noah Rule had different context, let’s apply it to one thought within your reality and completely within your control: With the equity market’s well-off April lows, what a propitious moment to gut check your clients’ risk tolerance.
Here’s how you might approach such a conversation in the weeks ahead:
“Before summer kicks into high gear for you and your family, let’s carve out time to review the level of risk reflected in your current portfolio strategy. We expect volatility to persist, and we want to be sure you’re comfortable and discuss portfolio modifications if appropriate.”
Think about it, even if they choose not to take you up on a meeting to discuss further, they will appreciate your thoughtful concern. If there is a significant summer decline, they will remember your call.
Bottom Line: Commit to a risk tolerance gut check with every client in the weeks ahead.
With the equity market’s well-off April lows, what a propitious moment to gut check your clients’ risk tolerance.”
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