It is perhaps the call that irks advisers the most. Clients have heard on the news, or seen in their morning paper, that 'the market' is up, but also notice their portfolio is down.
Then as a crisis emerges, the initial irritation turns into a panic, the urge to sell everything takes over, and the adviser must consider how to handle the understandable panic they see, even from some longstanding clients.
Joe Wiggins, director of liquid markets at St James Place, says: “In a crisis, clients’ time horizons get much shorter, because so much more is happening, we just think about the next moment. The hardest thing to do in that period of time is nothing, but if your portfolio is set up properly, that might actually be the best thing to do.”
It is an urge that is not restricted to clients, says David Coombs, head of multi-asset investment at Rathbones Unit Trust Management.
He says: “Fund managers are human beings just the same as anyone else. They are just as prone to emotional reactions when they see a lot of red ink on their screens. Having worked in this industry through many crises the important thing is to step away from it a bit.
"Look at the investments that have fallen, and ask if you want to be invested at this level, but also, if they start to rise from the low points, ask yourself, you owned them at a lower valuation, do you want to keep owning them now they have gone up?
"In terms of conversations with clients, I would say that as a professional investor I am paid to make unemotional decisions, clients need to trust me to do that, and if I get them wrong, they can go to a different provider.”
Eren Osman, co-chief investment officer at wealth manager Arbuthnot Latham, says: “Any investor can be prone to emotional biases. The key is to have a process, because if you have that, and stick to it, then you are detaching yourself from the emotional aspect. When a crisis happens, it is often the second order effects that do the damage.
"There is an initial sell-off, which then prompts people to sell-off whatever they own that is most liquid, and they don’t care about valuations at that point. And that causes valuations to detach from fundamentals, they do that on the upside when markets are buoyant, so they detach from fundamentals to the downside in times of crisis, and that is why crises can be an opportunity for investors.”
Coombs is more sceptical that crises necessarily represent an opportunity: “In that environment, your tactical asset allocation changes daily. Your strategic asset allocation should be the same, and remain within the parameters of a client's needs. But the tactical asset allocation changes as you react to how the events are moving. In a crisis, capital preservation can be the focus.”