Here are a few more of the traps your senior clients may find themselves in without the benefit of your financial guidance and counsel, and the ways to fix them.
The problem
"I don't like totally safe investments right now, I am getting back in. Look at how much the market has gained." This investment mistake is called "short-term memory syndrome."
We quickly forget what happened last quarter in favor of what happened last week.But the stock market is based on earnings and GDP expansion. Everything else is sensitive to emotion and subject to volatility. This is also called "chasing returns." There is a strong tendency for your prospects and clients to respond to news reports that tout something that happened today or this week while ignoring a longer-term perspective.
The fix
Talk to your seniors about the rule of 100. Discuss the level of volatility over the last two recessions if they had been fully invested without regard to their retirement horizon. Tell stories about seniors you have helped to weather the last few storms.
