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Two Good Years

As financial advisers, we’ve had it relatively easy in the past couple of Annual Planning Meetings (APM). Markets have been kind, with 2023 and 2024 delivering strong equity returns, the only asset class worth bothering with for the long term after inflation and fees. Investment discussions in client meetings have been easy – portfolios have grown (a lot), risk strategies have held up, and clients are happy.

But as I sit in the thick of surge meeting season (which, this year, has been absolutely brutal), I find myself delivering the same message over and over: We’ve had two good years.

That’s not just an observation; it’s a warning. Markets don’t move in straight lines, and history tells us that after long positive periods, a correction (temporary decline) is due. Now, I’m obviously not making market predictions. None of us have a crystal ball, but I am reminding my clients (and myself) that investment returns don’t come in a steady, upward stream.

It’s easy for clients to become overconfident after a couple of good years. They start questioning whether they need as much diversification. They wonder if they should take on more ‘risk’ because ‘the market always goes up.’ They might even ask why we hold defensive positions when the past two years have been so rewarding. And that’s exactly when our role as financial advisers is most important.

In every meeting, I’m reinforcing the fundamentals:

Discipline matters. Good investment outcomes aren’t about reacting to the last two years; they’re about sticking to a strategy that works over multiple decades.

Volatility is normal. After two strong years, we shouldn’t be surprised if there are bumps in the road ahead.

Long-term thinking is key. The clients who stay the course through market downturns are the ones who come out ahead in the long run.

As advisers, we’re also human. Let’s not pretend that back-to-back strong years don’t make our lives easier. These meetings have been smoother, clients are happier, and we’re not having to explain why their portfolios are down 20%. But that doesn’t mean we can get complacent.

Right now, in the middle of my surge season, I’m seeing client after client, day after day. It’s a grind. But this is when we earn our keep. It’s not the easy years that define us, it’s how we prepare our clients for what’s coming next.

So, as you power through your meetings, don’t just celebrate the good times. Use them to prepare clients for the future, whatever that may hold. Because after two good years, we know one thing for sure: smooth sailing never lasts forever.

📰 Articles & Blogs

When a Crystal Ball Isn't Enough to Make You Rich [12 minutes]. Would knowing the news a day in advance make any difference?

The Value of a Financial Advisor: What's It Really Worth? [20 minutes]. A skilled adviser can transform a client's future.

Make your investing an infinite game [4 minutes]. When financial success becomes a lifelong pursuit, most of the noise disappears.

Here is how to explain, and show, your value to a client in 30 seconds [2 minutes]. Most clients can look forward to a better future if an adviser is involved.

Fix, Fine, Flourish: Framework To Re-Engage Stagnant Clients [16 minutes]. How to transform routine check-ins into powerful conversations.

The Power of the Right Question: Asking Better Questions [5 minutes]. The right questions can lead to deeper insights and better decision-making.

🎧 Podcasts

TRAP 65 - The Metrics That Matter [95 minutes]. The TRAP pack discuss the metrics they monitor to assess the health of their businesses.

Rory Sutherland - The Secret Weapons Of Marketing Psychology [129 minutes]. How can you decode the world around you and master the art of marketing?

At HUM London 2024, David Swanwick discussed the critical role of trust in client-adviser relationships. One key takeaway: high-trust clients are more resilient during market volatility.