June 2021 Issue: Helping your Clients Through Investment Mania-Helping your Clients Through Investment Mania by Brian Thompson

Helping your Clients Through Investment Mania by Brian Thompson

Pdf Summary

The article discusses how financial advisors handle conversations with clients who are interested in risky investment opportunities, such as GameStop shares and cryptocurrencies. The advisors emphasize the importance of educating clients about the risks involved and setting appropriate expectations. Some advisors use these situations as an opportunity to discuss overall risk in the economic cycle, portfolio management, and the need to manage risk prudently. They also advise clients to have a long-term investment plan in place and not to speculate without a solid rationale. <br /><br />Advisors suggest allocating a small percentage of the portfolio as "play money" for speculative investments, while the majority of the portfolio should be invested in a well-diversified and long-term strategy. They also recommend having a cash reserve for emergencies, maxing out tax-deferred accounts, and taking advantage of employee stock-purchase plans before engaging in speculative investments. The article highlights the importance of distinguishing between long-term investing and speculating on individual companies, and the risks involved in market speculation.<br /><br />Ultimately, advisors aim to help their clients understand the impact of risky investments on their financial goals, their risk tolerance, and their overall financial plan. They stress the importance of approaching investments with a long-term mindset and not being lured by short-term market trends.

Keywords

financial advisors

risky investment opportunities

educating clients

portfolio management

long-term investment plan

speculative investments

well-diversified strategy

cash reserve

risk tolerance

financial goals