What to Tell Retirement Clients About Market Distress: Advisors' Advice

Conventional retirement planning wisdom focuses on the long-term plan, but sticking to the strategy can be tough when markets plummet and headlines warn of a potential recession. That's been the case to start the week, with a global selloff of risk assets that started Friday kicking into overdrive during early trading Monday. Some mega-cap stocks pared their losses as the day progressed, but the major stock indexes remained down — with the most significant losses concentrated in the technology sector. Before trading began, Nasdaq futures tumbled 6.5%, coming close to triggering a circuit breaker. The index has fallen more than 10% since its July 10 record, passing the threshold that meets the definition of a correction. The turmoil has fixed investors' eyes even more firmly on the Federal Reserve, with some market participants calling for an emergency interest rate cut after officials elected to hold rates at a two-decade high. While financial advisors and their clients have navigated uncertain periods before, each fresh bout of market volatility raises new questions. Is this time any different? Should portfolios be adjusted to better reflect an evolving economic outlook? With the broad market declines in mind, eight financial planners answered questions from ThinkAdvisor: What are you telling retirement clients about the surge in market volatility? And how have you been communicating with them about risk more generally in the past six to 12 months? See the accompanying slideshow for their responses. Some have been edited for length or clarity.