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How to Talk to Your Clients About Investment Myths

It’s likely your clients have heard plenty of advice about the best investment strategies to follow. However, that advice can be riddled with myths that can actually hurt their financial portfolios.

It’s your responsibility to talk to your clients about the investment misconceptions that could lead them astray as they strive toward their goals. We offer advice on how to debunk the most common myths and steer your clients in the right direction.

Myth: It’s All About Timing the Market

If your clients are convinced that timing the market is their ticket to success, remind them that investing for the long term is their best bet. Stocks have averaged an annual return of 8% since 1928, so while it’s sometimes hard to be patient with the long game, it’s the smartest play— even when the market is volatile. It’s also impossible to perfectly time the market trough and missing just a few days of the rally can have a significant negative impact on their portfolio.

Myth: Sell When the Stock Market Is in Trouble

When stocks plummet over a short period of time, your clients may become anxious and consider dumping their investments so they don’t continue to lose money. The fact of the matter is, even when the market seems to be at its worst, it always rebounds — and selling when prices are low turns a paper loss into an actual loss.

Myth: Gut Investments Are Good as Gold

If a client believes they should invest in a certain stock simply because they feel it in their gut, you may need to steer them to a more responsible investing strategy. Remind them of the benefits of their diversified portfolio that aligns with their risk tolerance – and the thoughtful approach that has gone into building that portfolio.

This is also an opportunity to teach them about the power of index funds and index exchange-traded funds. Since index investments rely more on the overall performance of the market instead of just one or a few stocks, they’re typically a safe bet for investors.

Myth: I Don’t Have Enough Money to Invest

Even small amounts of money can go a long way when invested as part of a well-designed investment strategy. If your client’s employer has a 401(k) plan they can start investing immediately, even if it’s as little as 1% of their overall pay. If a workplace plan isn’t an option, encourage them to set up an IRA and begin investing small amounts regularly. You can help them develop a plan to increase their contributions so they can start investing for a comfortable retirement.

When Trust Matters

Your relationship with your client is built on trust. And as a Farm Bureau Wealth Management Advisor, you’ll join our growing network of more than 1,700 agents with 540,000 clients who trust us with their livelihood every day. Learn more about the benefits of becoming a Farm Bureau Wealth Management Advisor.