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How to Sell Mutual Funds When the Market Is Down

by Mark P. Cussen

Overview

Nothing can be more frustrating for financial advisers and investment professionals than trying to do business in a down market. Getting clients to invest at this point is one of the hardest tasks in the business, especially if they've already lost money. The ability to accomplish this is part of what separates successful advisers from mediocre ones.

Step 1

Stay in contact with all your current clients and monitor their reactions to market conditions. Those with money sitting in cash may be your best candidates at this point. Your current clients will be more inclined to like and trust you than new prospects, so use your relationships to teach them that this is the best time to invest.
Step 2

Show your clients the historical cycles of the market and how they eventually rebound, typically in the middle of a recession. A wealth of materials is available that clearly shows this cycle in easy-to-understand charts.
Step 3

Position your clients and prospects in a mix of funds that invest in all segments of the market, so that a portion of their portfolios is invested in the bearish segments of the market, while also providing exposure to more stable asset classes that will give them some current income or growth, such as bonds or real estate.
Step 4

Pitch a strategy that divides a portion of their income into guaranteed investments like CDs or Treasury securities that will grow back into the entire amount of their initial principal at maturity. Put the difference into a mutual fund in the meantime and let them watch it grow. When the bond matures, they may be amenable to moving that into mutual funds, too.
Step 5

Put your new clients into a dollar-cost averaging program that moves a set dollar amount of money into the fund or funds each month over a period of time, such as a year. This will allow the client to purchase into the funds at a lower overall cost, as the money will buy more shares of the fund when the price is low and vice-versa. This will improve their overall investment return over time.

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Consult your mutual fund wholesalers for more sales ideas and materials. They will always be glad to help you bring clients into their funds.
Consult your mutual fund wholesalers for more sales ideas and materials. They will always be glad to help you bring clients into their funds.
Clients who buy in at the bottom may see their fund shares rise quickly. Of course this is good, but make sure they understand that this rate of growth is not sustainable over time.
Clients who buy in at the bottom may see their fund shares rise quickly. Of course this is good, but make sure they understand that this rate of growth is not sustainable over time.