When clients complain about good news

This year’s turning out well for equity investors—the S&P 500’s up more than 25%. But that doesn’t mean you’re immune from complaints. Here are three situations you may encounter—and how to handle them.

1. “I’ve missed the market move”

When indices break into new territory, investors get nervous. The market’s cyclical, isn’t it?

The real issue: It’s too late to get in.

Answer to avoid: “Whose fault is that? Why didn’t you take my advice over the past few months/years?”

Read: How to answer critics

Message to convey: Markets are often considered a leading indicator for the economy. They decline when compelling alternatives are present. Because of the fear of sharp drops, dollar-cost averaging makes sense.

How to say it: “Your concern is the market can’t go up forever. Bear in mind the market took about five years to return to its October 2007 high. What about the growth that should have taken place in the meantime? The stock market is often considered a leading indicator for what the economy will look like six months down the road. It’s a slow, fragile recovery, but statistics are making a good case for economic improvement. Let’s consider dollar-cost averaging right now. Invest a portion, and if the market continues rising, we’ve already established a position. If it declines, we can make additional purchases and average down your cost basis.”

2. “Everyone says the market’s going down”

The stock market’s rise has surprised many pundits. Cable and broadcast news stations interview people making the case why the good times can’t last. Investors remember the dot.com bubble. People are scared to get in, or want to get out.

The real issue: Some people assume the “smart money” gets out early. They don’t want to look foolish because they didn’t heed the warnings.

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Answer to avoid: “Haven’t I told you not to watch TV news? They’re all jerks. I’ll tell you what you need to know.”

Message to convey: Listeners are usually hearing opinions, not news. Balanced reporting often involves interviewing people who take opposite sides of an issue. Experts interviewed are often seeking credibility and business for their own firm.

How to say it: “You’ve heard the expression, ‘Bad news sells.’ Here’s the rest of the quote: ‘Because good news is no news.” Robert Louis Stephenson, the guy who wrote Treasure Island, said: “Everyone lives by selling something. TV news programs sell worry and breaking news. They need you to be coming back and watching their station. What you’re getting isn’t advice. You can tell because they often feature a disclaimer: ‘The opinions of the host and callers are not the opinion of this station, etc. Advice comes from an advisor who understands your unique situation.”

3. “I want a good return but interest rates are so low”

Many people want to make money by earning interest and receiving their principal back at maturity. They often are attracted to riskier investments promising higher yields.

The real issue: “I’ve always done things a certain way and now it’s not working.”

Answer to avoid: “I’ve got just the thing you need. Have you heard about emerging market debt?”

Message to convey: Do you need the money back on a specific date or can you leave it alone for a while? Would you consider investments other than bonds or CDs? Let’s talk about total return.

How to say it: “There are other ways to earn better returns, although you’d need to understand risk. Have you considered buying common stock in established companies that have been paying dividends for decades, often with annual increases? You are looking at total return—the income you collect along the way combined with the potential gain or loss if you sell the stock down the road. Here are a few examples…. If you prefer to stick with more familiar investments, you might try building a ladder of short-term bonds, accepting lower interest rates now with the potential of getting higher rates later when each bond matures.”

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