How Are IMCA Members Addressing Market Volatility?

How Are IMCA Members Addressing Market Volatility?

The U.S. stock market performance the last 30 days resembles a roller coaster ride: a steep, initial drop followed by a moderate climb and a few rolling hills. In the wake of the recent volatility, IMCA members chimed in on what they are hearing from clients, how they are communicating with them, and what themes of reassurance they are sharing. Findings from a recent IMCA survey show that market volatility is not spooking most clients. This can be attributed to advisors educating clients about market volatility, and keeping in constant communication with clients to reassure them in the ever-changing landscape that is the global market.

Findings from the IMCA survey included:

Themes of reassurance:

  • 78 percent of IMCA members said they are communicating that market declines are followed by recoveries and the stock market generally grows over the long-term.
  • 65 percent said they are telling clients that a downturn may represent an opportunity to invest at lower prices.
  • More than 60 percent of IMCA members said they are communicating the age-old, long-term investing theme that nobody can time the stock market.

One IMCA survey respondent stated:

We constantly tell our clients that corrections and bear markets are a reality. They will happen, and that is why we insist on doing comprehensive planning to cover five years of liquidity needs before investing any long term capital.

Communication Methods:

Most IMCA members (93 percent) are communicating with their clients via phone calls, while 76 percent are using e-mail as their main source of contact. However, more than half (55 percent) of IMCA members are taking it a step further and holding in-person meetings to help alleviate any uncertainty their clients may have during this time of market volatility. Market updates and newsletters have also been beneficial, say 45 percent of IMCA members, for informing clients of the latest changes in the market.

Client Concerns?

All in all, the majority of survey respondents found that few clients reached out to them for guidance during recent market volatility. Research suggests that many clients are seeing this tumultuous market as an opportunity to grow their portfolios.

One IMCA survey member attributed his clients' sense of security to predicting and communicating market turbulence:

[Clients] are very comfortable because they have balanced portfolios. Thanks to [the IMCA 2015 Annual Conference] I communicated to expect a 10 to 15% correction. Reduced equity, and clients are happy to be outperforming!

  • Almost 70 percent of IMCA members said only 10-25 percent of their clients reached out to them for guidance during the recent downturn/correction.
  • Only five percent of IMCA members said somewhere between 25 and 50 percent of clients have contacted them for guidance.
  • Nearly a third of IMCA members said their clients are expressing interest in a buying opportunity at discounted prices.