I am steeped in a research project with the intention of building a more compelling dialog for advisors to use in describing the need for diversification with clients.  It would seem, based on the recent conversations I am having, advisors are frustrated by the pressure coming from clients who are not happy the results of “diversification” in their portfolio as compared to the return of the S&P 500  for 2014.  The clients see it as a looser’s game.  It has to be frustrating for advisors, because they know the value of diversification and yet, from the client’s perspective, it did not help at all last year.  In fact it would seem to have been more damaging than helpful.  And of course the client is right (for the moment).  Brad Eisen at Salient Partners, a friend and colleague forwarded this link to an article that I believe is a pretty good explanation of the psychological challenges advisors face and why clients are making the discussion so difficult to have.  I think while the article explains the reasons why clients feel the way they do, it does little to provide the right information which would allow advisors to improve the outcome of the conversation with their clients.  That is what my project is all about.  Helping advisors be more prepared and compelling when they talk about diversification in today’s investment environment.  If you have any ideas or have had success with your conversations with clients, please let me hear from you.  It is a conversation we all need to be better at.  Heff

Check out the article by Brian Portnoy: