Advisor explains why his style never wavers, whether it's fear or FOMO gripping the market
Evan Inglis stays on message. For all the noise that daily market movements and big news headlines provide, the executive financial consultant at IG Wealth Management holds true to a communication strategy that he believes has helped reassure clients through volatile market periods. Today, though, advisors and clients find themselves in a bull market with its host of ‘good problems.’ These are times when many advisors say they hear crickets from clients and market exuberance usually means a communications lull. Inglis, however, stays consistent in his messaging.
“We're talking with all of our clients on such a regular basis that invariably, we have those conversations around investment reviews when we're doing the plan updates as a whole. Now, clients will open up an investment statement and see that they’ve had an exorbitant rate of return over the past 18 months,” Inglis says. “At these intervals we have the inverse exchange that we might have in a bear market. In a bear market we would say ‘this is the last time we’re considering making a change, we have a plan and we’re sticking to our plan,’ and urge patience. In a bull market we’re more keen to give a subtle reminder that what goes up can come down.”
When talking about the potential for a correction with clients, Inglis emphasizes the unpredictability of that eventuality. Cycles can’t be timed, but they can be expected as a near certainty of the market. With that established Inglis will suggest the possibility of pocketing some gains, taking some money off the growth side of the portfolio — beyond just standard rebalancing — and creating a bit of dry powder to function both as protection against the downside and an opportunity to buy at lower valuations. Inglis notes, though, that any conversation about buying the dip is couched in the reality that markets cannot be timed, and buying a dip is no guarantee of upside.
The financial plan is a core touchstone in all of these conversations. When clients feal a strong fear of missing out (FOMO) on further upside, Inglis can remind them that their plan may only hinge on an average annual return somewhere in the single digits. A hypothetical 25+ per cent return on their equities this year, therefore, puts them ahead of their return goals. Pulling a bit off the table to secure those gains is therefore a prudent decision in the context of the plan.
That is not to say every client is gripped by FOMO and wants to let their equity allocations keep riding. Investors inherently feel loss more acutely than gain, and Inglis says that while clients may not come to him expecting a crash, they may ask him directly what should be done with their gains.
As much as the plan functions as a touchstone, Inglis notes that gains like these could prompt a reassessment of the key inputs in a plan. Has the rise in equities fundamentally changed a client’s risk appetite, their willingness to accept a loss, or their comfort level around volatility? There are opportunities in the communications process to revisit some of those questions and see if their answers could inform a change in overall strategy. That could be as simple as adjusting a rebalance to maintain a slightly higher equity allocation.
Talking about gains and losses and plans also must hinge on the goals that the plan serves. If this year’s market gains mean a client can take their dream trip a year earlier, or help their grandkids buy a house, or make an impact on somebody’s life, Inglis will ask if they want to do that. Drawing down on an outsized gain to serve a client’s life goal can be an entirely justified use of these market wins. It’s important, Inglis notes, that advisors don’t lose sight of the goals with their clients. If the conversation is just about returns maximization and risk, then something essential is being lost.
Through all of these conversations and permutations, Inglis emphasizes the consistency of his messaging, his tone, and the media by which he’ll reach clients. They receive email updates and phone calls, they’ll never get a text from him because that medium has a different — more urgent — implication. He’ll use key phrases to reassure, like ‘rash decisions,’ or ‘follow the herd’ to dissuade panic when markets are down. He’ll advise against a heavy focus on the news because of the emotional response that modern news media is meant to elicit.
“There's that old Warren Buffet saying: “be greedy when people are fearful and fearful when people are greedy.” I don't want clients to be fearful or greedy,” Inglis says. “I want I want clients to be in a comfortable middle ground where we can say ‘here's an opportunity to take advantage of something,’ or ‘here's an opportunity where we might want to hold back slightly,’ or ‘here's an opportunity where we're going to change our course a little bit.’”
