Advisers should spend more time discussing the potential effects of future crises on client investments, despite their inherent behavioral biases, and unexpected political or economic developments.
Markets regularly have periods of falling prices, but it is easy to focus on the upside, directing relatively little effort towards spotting the next crisis. Press coverage can seem short-term, with negative events rapidly forgotten. Managers tend to concentrate on the positives and the potential for downward market moves can seem neglected.
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Q G Rayer (2017), Crisis management: IFAs must discuss market risks with clients, Citywire New Model Adviser®, issue 553, p37, 26 June 2017.