Clients inundate advisors as equities drop on fear of a prolonged downturn. As equity markets roll back on fears of the effects and duration of a global economic downturn, fee-based wealth managers are scrambling to reassure nerve-wracked clients.

"We've had more calls in the past month than we normally get in two years," says Roy Williams, a principal of Pennington, N.J.-based Prestige Wealth Management. "This is unlike anything we've seen in a lifetime."

Ellen Jordan a v.p. of Bryn Mawr, Pa.-based Bryn Mawr Trust's wealth-management unit, says the clients most in need of comfort are the recently retired or those who are within a couple of years of retirement.

Stay in

"We're telling them not to feed into the panic, not to sell into this," says Jordan.

The S&P 500, already down 25% for the year, lost another 20% this week. A noted feature of the recent decline is the apparent broadening of the malaise from financials across the industry spectrum. That's seen as a reflection of a credit shortage resulting from cash-strapped lenders tightening their requirements on businesses and consumers alike.

A particular challenge of this market is the fact that normally uncorrelated assets aren't offsetting losses, according to Williams. "You have equities and bonds going down at the same time and even someone who's all in CDs, with inflation there's risk no matter what you do."

In response to the market's downturn, Bryn Mawr is urging its private clients -- typically people with between $1.5 million and $5 million under management with the bank -- to maintain a disciplined approach to investing.

Hold on

For clients, especially retirees, who don't think they can stand it, Bryn Mawr suggests a partial move to cash "to meet expenses for the next two years," says Jordan. But otherwise they're being advised to stay in the market.

LPL Financial-affiliated Prestige, whose average relationship size is in the $1-million-plus range, offers similar advice. In fact, it extends this hold-steady view to its clients' general business concerns as well as investment markets.

"I was talking to one client who owns a mortgage company," says Williams. "My advice to him was 'Keep it going, stay in business; move into a one-bedroom place if you have to, but hold on, because at some point this is going to turn around.'" Meanwhile Williams says he and his colleagues are working far longer hours than usual to keep clients calm. "It's what you have to do," he says. -FWR

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