Keep in touch, maintain long-term outlook and watch out for tactical breaks. Despite recent turmoil in the capital markets, wealthy investors and their advisors have so far stayed focused on long-term goals while exploring new investment avenues, according to a new WealthTrends report out of Dow Jones' Wealth Management Advisory Council (WMAC).

Piercing glimpses...

Roiled by the collapse of the subprime-mortgage market, falling real-estate values, geo-political uncertainty and rising energy prices, the U.S. equity market has been all over the map lately, with the S&P 500 going from a then-high of 1553 on 19 July to a four-month low of 1404 on 15 August to a new high of 1565 on 9 October to a new down-trend since then.

"It's reasonable for people to have questions and concerns in the face of today's worrisome headlines and volatile markets," says WMAC member and Citi Smith Barney senior advisor Michael Sawyer. "Our clients look to us for considered, informed, reasoned advice and insight, not sound bytes."

WMAC gleans views for its occasional WealthTrends reports solely from its own membership, a panel of nine advisors.

Wachovia Securities advisor Joseph Montgomery suggests, handily enough, that the antidote to market volatility is financial planning. "Your financial advisor should focus on your long-term life and financial goals," he says. "Wealth managers won't be tempted by high returns at the risk of your principal. They know what investments will hedge against turmoil in the markets and can plan for your retirement rather then questionable short-term gains."

...into the obvious

WMAC also thinks it's a good idea to communicate with clients on a regular basis, both to calm them generally and to keep them up-to-date on their portfolios.

And of course experience with past periods of rockiness helps an advisor cope with their clients concerns. "High-net-worth investors benefit from their wealth manager's experience to provide context for analysis and sound advice to ensure a diversified, strong-performing portfolio for their clients," says UBS advisor Anthony DiValerio.

Finally, advisors are taking advantage of developing market trends to explore tactical investment strategies for their clients. "Times of turmoil provide opportunities for informed investors," says Credit Suisse Private Banking advisor George Schietinger. "Wealth managers should be contacting their clients about [tactically] investing a part of their client's portfolio to benefit from the changing market while keeping strategic investments on track for long-term goals."

Overall, says Merrill Lynch's Patrica Bell, "times of general anxiety" bring out the best in wealth managers. "This is when wealth managers' client-focused in-depth process to determine long-term goals and set appropriate risk profiles really pays off," she says. -FWR

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