Are clients Nervous Noras?

The three box thinking does not sit well with me. Investors aren't a fixed type, the same person is calm at a dinner party and a Yo Yo at 3am when the market's down 20%. Psychology isn't a personality slot, it's a state, and it shifts with the headlines, the mortgage, the size of the loss. Labelling someone a Nervous Nora risks treating a rational fear as a character flaw. Everyone, professionals included, loses their nerve at the extremes; that's what makes bubbles and crashes. The job isn't to sort clients into tidy boxes but to understand what each one actually fears and why. A plan that survives a 40% fall does more for confidence than any label. Plus the market's whole purpose is to make fools of the confident, so a little nervousness is often wisdom, not weakness. Better to meet people where they are than to name them.

Most of our clients probably arrive as Pragmatic Penelopes, somewhere between a Nervous Nora and a Calm Carrie. They know they should invest, but worry about getting it wrong after holding cash for some time. The Yo-Yos are rarer, but do the most damage by buying after markets rise and selling when they fall.

The antidote is rarely a clever product; it is a properly diversified plan, communicated regularly, so clients are reminded why their portfolio is built as it is when markets wobble.

Modelling investment projections can help too, putting short term movements in the context of a much longer term plan. We use market history rather than pretending we can forecast the next crisis - markets have survived wars, recessions and inflation before, and a chart shows that better than a spreadsheet of numbers. Avoiding jargon is essential.

Confidence grows with experience. Clients who have been through several market cycles stay calmer, having seen the process work.

Nervous, nearly always, but not for the reason the label suggests. Most owners who come to me are not frightened of markets. They are frightened of their own bank balance. Part is tax: a payment on account on 31 July, then the balance next January. Part is VAT, money they are only holding for HMRC. The rest is spare. Nobody has shown them how much. So they do nothing. It is the only choice that does not need a number they have not got. If that sounds like you, the risk questionnaire is not the first document you need. The boring one is a one-page cashflow forecast. Tax set aside and dated, then one figure for what you can put away each month without it hurting. Owners act on a picture of their own money. They rarely act on a spreadsheet. Once the tax is parked, the nerves go with it. What to do with that money then belongs with a regulated adviser, not with me. Get the numbers straight first. The confidence tends to turn up with the spare cash.