It’s well documented that most people underperform the market. By fleeing at when times are tough and re-investing after a recovery is nearly finished, too many people sell low and buy high, leaving a few people willing to do the opposite – or just hold tight across market cycles – to reap excess rewards.

“One of the greatest services a financial advisor can provide to clients is helping to ensure that in times of market turbulence, reason, discipline, and objectivity triumph over emotions such as fear, greed, and regret,” writes Gregg S Fisher, the chief investment officer at Gerstein Fisher in Advising the Behavioral Investor: Lessons from the Real World.

Since that’s easier said than done when people are in a near panic about their investments, Fisher presents some concrete tips for helping clients stay rational during a bear market.

sentiment v business cycle 0115 Market Cycles

mutual fund allocations v sp500 0115 Market Cycles

Start talking about market cycles early

First, financial advisors shouldn’t wait until a market downturn to start talking to their clients about cognitive biases, how greed and fear cause underperformance, and the importance of not reacting emotionally. Most new clients start investing during a bull market (those who start investing when the market is depressed are already a rare breed), so there should be time to get on the same page before the next crisis, if not the next correction.

Of course it’s not enough to preach, financial advisors should talk their clients through hypothetical situations to gauge their risk tolerance and to identify attitudes that could be counterproductive down the line. Building a portfolio that matches your client’s actual risk tolerance (which may not be the same as the stance they claim to have) will make future conversations a lot easier.

Use both data and personal stories to persuade

When trouble comes, as it always does sooner or later, Fisher says that it’s important to include both the personal and the objective to really persuade clients to act in their own best interest. Providing data that shows how people sabotage their own returns (like the charts above) gives people a concrete reason not to sell into a bear market. Sharing personal stories about how you’ve seen other people react, and the outcomes, can help clients relate if the numbers alone aren’t persuasive.