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Clients may need more reassurance than ever: wealth manager

TORONTO (Reuters) - “The end of capitalism as we know it,” was the message a client had left for Erika Safran of Safran Wealth Advisors while she was on a flight last Thursday afternoon. “The world is falling apart.”

The Dow had just tanked around 1,000 points in a matter of minutes in its biggest-ever intraday drop. By the time Safran reached her hotel, the market had rallied some, but the damage was done. Nerves were rattled.

She wrote an email to her clients telling them what she thought of situation in Europe, how it may have been exacerbated by computer errors, and how it related to their investments.

Safran, whose clients average around $750,000 in investable assets, received five responses, including one from a new client.

“I appreciate your note on the mess of the markets yesterday,” the client wrote. “FYI, during the entire crash, my former adviser sent not one message to anyone ... monitor well for us and stay healthy.”

Staying in regular touch with clients is more important than ever in the current climate of market volatility -- one that is unlikely to change any time soon.

Safran, whose firm is based in New York, said part of what she has been telling clients is to prepare for big swings in the market, because the systems in place these days enable quicker reactions to news -- or rumors -- and more exaggerated stock movements.

Allan Small, an investment adviser with Dundee Securities in Toronto, said he is giving clients a similar message.

“I think volatility is baked into the equation from here on in and I think if it’s not Greece or Europe, then it’s going to be something else,” he said.

“You have what we call the herd mentality and with the institutional traders and the high-frequency traders and the flash traders, and all that is going on, I don’t see how volatility cannot be.”

Small said he contacts all his clients every six to eight weeks to fill them in on how their investments are doing and to ask them if they have any concerns.

He said a couple of his clients were getting nervous and were considering pulling out and parking their investments on the sidelines in fear of a repeat of the collapse of 2007 and 2008.

“They decided in the short term not to do anything drastic, which was my recommendation,” he said, adding that he doesn’t feel the current market environment is anything like the period that led into the recession.

Small, whose average client is 50 years old or more with a few hundred thousand in investable assets, said he’s actually recommending buying certain names right now.

“Most clients are OK with what I’m recommending at this time, which is pick up investments that just two weeks ago were a little on the pricey side,” he said.

“So, pick up some good yield, try to pick up some good dividend payers if we can ... if they are a little cautious about investing, at least we go into something where they are getting paid to wait for this market to rebound back to levels where it was just two weeks ago.”

Safran said she’s telling her clients to stick with their plans.

“In huge market swings, there is nothing to do but pick up the phone and calm clients who may be nervous, and other than that, discuss the amazing historical novelty of this event,” she said.

“Sit back,” she said, “keep in mind your objective, and recognize that you have someone looking out for your best interests.”

Reporting by John McCrank; editing by Frank McGurty and Rob Wilson

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