Greg Davies: Should a change in market values mean a change in risk?

Consider risk capacity

clock • 5 min read

When it comes to how a client should react to a fall in markets, then - as with a lot in financial advice - writes Greg Davies, it is not the answer that counts so much as the reliability of the process that got you there

Markets have fallen. A client calls their adviser. On their lips, a question perhaps as common as they come: what should I do? Some will want to sell in panic, fearing a further fall. Others will want to buy - to seize the opportunity of knock-down prices. Whichever way their speculation is swinging, there is a temptation to think it must boil down to each investor's attitude to risk. The adviser, knowing the client's psychological willingness to take on long-term investment risk has not changed, counsels the client to sit tight. Don't overpay for short-term emotional comfort. Don't try ...

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