Constantly reassuring anxious clients with sound long-term investment advice is the best policy for financial planners in volatile markets, according to an Intech head.
"It's certainly the worst market I have experienced in my time and I know that, as financial planners, you are getting a lot of clients wondering about what to do in these troubled times," Intech chief executive John Gethin-Jones said at a presentation in Sydney on Friday.
"And it is really hard to give them a definitive answer of what will happen in the coming months and the coming years.
"We do know what will happen in the long term because it has happened for 100 years."
The message from the Skandia subsidiary chief was reinforced by the long term gain statistics of the All Ordinaries index.
The index was worth 500 points during its 1980 inception and rose to a record 6873.20 in November last year.
However, there are some pro-active approaches advisers can use to prepare clients for times of volatility.
"We have certainly enjoyed the equity market run over the last five years," he said.
"But what investors are asking themselves is 'can I really tolerate the level of risk I am experiencing at the moment?'"
A good way for a planner to be more pro-active is by discussing with a client whether they can tolerate the share market having one bad year out of every seven, Gethin-Jones said.
The recent equity market correction and volatility is presents good opportunities for Australian shares, he added.
The technical price-to-earnings ratio for Australian shares on aggregate has fallen from around 17 to 12, below the long term average of 14.
But the market may decline further, hence clients should buy shares in small and steady lots, Gethin-Jones concluded.
