It’s been difficult to miss the media coverage of the GameStop/Reddit/Robinhood drama, which has enthralled individuals of all ages, from elementary school to octogenarian. Regardless of which side you (and your clients) are on, this phenomenon represents an opportunity to engage proactively with investors on a variety of levels.
What’s going on?
Is it really David versus Goliath? Has David become Goliath? Your clients may wonder whether this is a temporary occurrence or has long-term implications. And, of course, the overriding concern they probably have is whether it is “good” or “bad” for the markets and should they be doing something. As their financial advisor, you can provide direction, lay out the facts in a neutral manner, and reinforce the benefits of following a plan tailored to their needs and circumstances, not chasing trends or the market.
Talk about it.
The events also lend themselves to a discussion on the connection between risk and the potential for significant reward, but also significant loss. A little knowledge about investment strategies, risks, gains and losses drawn from awareness and interest in GameStop can provide a foundation for more substantive and thoughtful discussions between investors and wealth managers. Through these discussions, wealth managers can also reinforce the value of their advice and the depth of their expertise.
Put it in perspective.
This is not the first time events similar to this have happened, but the rapid dissemination of information and, sometimes, misinformation, today magnifies the impact and is an indication of the rising involvement of the public in investing and the proliferation of investment-related information available from a widening range of sources. Putting the situation in perspective by citing previous incidents and their outcomes can provide context and a foundation for the sound advice and guidance provided by a financial advisor.
Exactly how the GameStop story will play out remains to be seen. In the meantime, showing your clients that you are monitoring the situation, thinking strategically, and actively engaging with them is a scenario we believe is likely to have a positive outcome.