Financial Advisers' Phones Ringing Off The Hook

The Wall Street bailout plan was supposed to calm financial nerves and markets. But since it was passed by Congress, the Dow Jones industrial average has plunged more than 1,000 points. Many investors are looking for guidance from their financial advisers.

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STEVE INSKEEP, host:

At this moment many investors are asking their advisors for guidance and in some cases comfort. NPR's Frank Langfitt has been talking with financial advisors and investors. He's here in the studio with us. Frank, good morning once again.

FRANK LANGFITT: Good morning, Steve.

INSKEEP: OK. What are you hearing?

LANGFITT: Well, a lot of the conversations are full of anger, fear, anxiety. You know, a lot of investors expected the bailout was going to calm things down, but every day they keep losing more money. The Dow is already down more than 30 percent since the fall of last year. Yesterday, I went over to the Charles Schwab branch here in downtown Washington. It serves people in Maryland, Virginia, lots of individual investors and families. I talked to Brian Lipps. He's the branch manager there. And he says each day staffers are getting 30 calls each, you know, every day. And people are calling in and saying, you know, what should we do? And some people are saying, shall we pull all of our money out of the market?

INSKEEP: OK. So that's the question. What's the answer?

LANGFITT: Well, his mantra - and I think he's been saying this to everybody who's calling - is panic is not an investment strategy. He points out, you know, if you get out now, you can't get back those losses. And you can't benefit when the market comes back.

INSKEEP: No, because the losses are on paper theoretically at the moment, if you haven't actually sold, right?

LANGFITT: Right. And so if you get out of the market, and the market begins to come back, you can't benefit from that. And historically, of course, the market always has come back. Some investors, of course, they're rebalancing, they're moving away from stocks. But a small percentage of his clients just can't take it. And here's how Brian Lipps put it.

Mr. BRIAN LIPPS (Branch Manager, Charles Schwab. Washington D.C. Metro Area): If you can't sleep at night because of the volatility in the market, are they - you know, they feel like the risk in the markets is not appropriate for them. And if they want to get out, they're going to get out.

INSKEEP: Meaning that they're going to in some cases ignore his advice to stay calm.

LANGFITT: Exactly.

INSKEEP: And?

LANGFITT: Well, he says most of them are paying attention and following his advice. When I was over there in the lobby of the Schwab firm, I talked to a variety of people. One woman was a retired doctor. She was moving money around. She was putting a lot in CDs, certificates of deposit, saving for her child's college education. She was even buying up tech stocks. So she has more courage certainly than I do right now.

There was another retiree I talked to whose name is Tom Shankle(ph), 67, used to own a bookbinding company. He lost $38,000 in just the last couple of months, but he says he won't pull out. He's still, though, pretty pessimistic. Here's how he described the market.

Mr. TOM SHANKLE(ph) (Retired Bookbinding Company Owner): I mean, this is worse than '87, because '87 it went down and went right back up in a week or two. This isn't. I don't see this going up until - if it even goes up at all, in the next year, year and a half.

INSKEEP: Frank, you said he is 67 years old. So he's in a very different situation than people who might be 25 and lose a little bit of money that they've started saving.

LANGFITT: He is. And one of the things that he's done is he's added a lot of cash too. So he's got an extra $40,000, because he sees, you know, kind of rough sledding, at least for the next year or two. And he wants to feel secure like he can do something if he needs to.

INSKEEP: Meaning he's getting money out of stocks or wherever it was.

LANGFITT: He is. What he's holding is what we call a larger cash position, so that he relies a lot on Social Security. And as he looks ahead, he just wants to be able to get to that cash if he needs to.

INSKEEP: Well, OK, that leads to another question, which is how financial advisors are dealing with all the pessimism they see out there.

LANGFITT: Well, there are a lot of long, soothing conversations going on out there, as you can imagine. There's this senior financial advisor that I've talked to before at Smith Barney. Her name's Mary Deatherage. And she says a lot of her clients now kind of see her a bit of a therapist. As she talks to them, they are filled with sadness, particularly the ones who have just retired recently because they had all these expectations.

They invested. They thought, hey, I'm going to have a really nice retirement. And then they see every day that retirement slipping away. And what she says is she tries to convey that she understands where they are, what their goals and problems are. And I guess it was yesterday she talked a woman who had just lost her job. And here's how Mary described how she manages those kinds of conversations.

Ms. MARY DEATHERAGE (Senior Financial Advisor, Smith Barney): As long as I can frame it with them that I know where you are, of course this came at a bad time for you. Sometimes you just want to know that somebody actually understands how you feel. So sometimes being quiet, you know, letting them talk themselves through on things, it helps a lot.

LANGFITT: Now, Mary says there are limits to what people can do right now. They can reduce some exposure to stock. Maybe move 10 percent out of stocks. That's not a lot. But she says that at a time when people really feel like they don't have any control, even doing something small like that at least makes them feel like they did something.

INSKEEP: Going through the seven stages of grief over the loss of your money. NPR's Frank Langfitt is our guide. Thanks very much.

LANGFITT: You're welcome, Steve.

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