(Refiling to fix typo in first paragraph)
By Lauren Young, Personal Finance Editor
NEW YORK Aug 8 For plenty of financial
advisers -- who also serve as quasi-therapists, spiritual gurus
and confidantes -- Monday was bad.
The S&P 500 posted its largest drop -- more than 6 percent
-- in nearly three years, sparked by rising fears of a
recession and fueled by the United States' loss of its perfect
triple-A credit rating. Panicked selling on heavy volume
resulted in the S&P's worst day since December 2008 -- every
stock in the benchmark index's components ended the session in
An adviser at a brokerage giant Merrill Lynch (BAC.N)
office in a Philadelphia suburb said the phones rang off the
hook all day.
"Thank goodness for people who are on vacation and not
calling in, although many are," she said, asking not to be
identified by name due to company policy. "Every call is too
long. Tons of emails. Everyone doing conference calls, which
are pretty much worthless."
She turned down the television volume several times and
"thought about putting on the Food Channel."
Alan Haft, an independent financial adviser in Newport
Beach, California, said his phone was buzzing with calls from
clients wanting to "sell everything."
"One calls saying the Mayan Calendar is coming true, that
he's absolutely certain this really is the beginning of the end
of the world," Haft said.
The eight money managers at Capital Investment Advisors in
Atlanta started their day with an emergency 8 a.m. EDT (1200
GMT) meeting to review the situation. The good news? "We don't
think this is 2008," said Mitch Reiner, chief operating officer
at the firm.
Reiner said more aggressive clients took advantage of cheap
prices, adding Intel (INTC.O), Procter & Gamble (PG.N), Eli
Lilly (LLY.N) and other large-cap dividend stocks to their
But one "very conservative client" wanted to know he wasn't
among the bargain hunters. Reiner's response: "Because you
can't handle being down 3 percent."
Trying to talk people off a ledge is never easy. Several
advisers said it was even more difficult on Monday because they
already talked clients off the ledge last week when the U.S.
debt deal was sealed.
But several advisers who focus on long-term financial
planning say their phones were quiet on Monday.
Richard Coppa, managing director at Wealth Health in
Roseland, New Jersey, fielded just three calls from clients,
"which honestly, is a good sign," he said. And the clients he
did connect with are "disgusted with our government, more than
anything." Added Patricia Powell, a certified financial planner
at Powell Financial Group in Martinsville, New Jersey: "It is
deadly quiet. I have not received a single client call or email
about the markets today."
One theory is that financial institutions are panicking
more than retail investors. "My inbox is getting flooded with
their "take" on the market slide, ratings downgrade, etc.,"
said Ori Pagovich of Gotham Financial Services in New York.
"Everyone either has a Webex, Webinar, white paper, update or
anything in between on the events of the last two business
With every big downturn comes opportunity, though.
"While clients are certainly concerned about recent market
activity, they are not panicking; some have viewed the current
pullback in the market as a potential buying opportunity," said
Joe Jennings, investment director for PNC Wealth Management
Monday was one of the heaviest trading days at ING Direct
Investing ING.AS. All told, the firm processed about 50,000
individual orders, which amounts to about 100 per minute, said
Dan Greenshields, president of the ING Groep NV unit.
And there were more buyers than sellers who snapped up
Apple (AAPL.O) and General Electric (GE.N), along with several
exchange-traded funds, such as SPDR S&P 500 (SPY.P), SPDR Gold
Trust (GLD.P) and Powershares QQQ Trust (QQQ.O).The bulk of
that buying came from individuals aged 21 to 39. "People with
long time horizons are buying," Greenshields says.
Margaret Black-Scott, who is president and CEO of Beverly
Hills Wealth Management, has been talking up Coke (KO.N),
Proctor & Gamble and Johnson & Johnson (JNJ.N) to her clients.
It's a variation on the mantra "know what you own" coined by
Peter Lynch, the legendary manager of the Fidelity Magellan
"Take a look on your pantry shelf. What do you have there
that you have to have?" said Black-Scott. "Do you drink lots of
tea or coffee or eat breakfast cereal? There are lots of things
we don't need that are nice, and then there are lots of things
we have to have."
(Edited by Jonathan Oatis)