Ease Clients into the Market With Dollar Cost Averaging

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You don’t have a crystal ball. So how can you help clients feel comfortable deciding where and when to put their retirement income assets and avoid analysis paralysis?

Clients planning for retirement may feel like they’re faced with an overwhelming array of choices: Have I saved enough to start my retirement? How much insurance do I need? When should I start taking Social Security? How much income will be enough? And the “right” answers to those questions may depend on factors beyond their control: How long will I live? What will my health be like? How fast will inflation rise? Is the market going to go up or down, and when, how much, and for how long?

You can play a vital role in helping clients sort through the swirl of questions that may leave them unsure when or how to make important decisions to help safeguard their lifestyle in retirement. After all, 7 in 10 Americans who don’t own a guaranteed lifetime income solution said it was because they didn’t have the right information to make a decision.1 You can help clients by talking them through the emotional highs and lows of market volatility.

Resisting market timing

Today’s clients may be watching market highs like a surfer watches a towering wave. They know the crest will have to break sometime, but when? And what should they do with that knowledge? We counsel clients not to time the market, but it can be challenging for them not to act when they’re seeing account balances change on a daily basis.

You know the pattern: When the market is falling, clients may agonize over whether to flee to cash. Yet when the market is high, clients may have a hard time knowing whether they’ve reached the ceiling of their risk tolerance.

Your action step

Don’t let them wait too long for the perfect wave. Instead, help them ease into the water – that is, the market – and make the choices they need to prepare their retirement income plans.

One way to help them transition is to explain how market volatility can work in their favor with dollar cost averaging (DCA). With a systematic DCA strategy, your clients will be able to make the most of their investment dollars. By sticking to a regular investment schedule over time, clients will buy more shares when the market is low and fewer when the market is high – a steady pace they may not have the discipline to keep up on their own.

When describing this strategy, help clients focus on their growing number of shares, not their account value, while they’re purchasing. Of course, it’s important to explain that while a DCA strategy allows investment over time instead of as a lump sum, it does not guarantee against an investment loss. Take a look at this to see how clients can ease into the market by applying a DCA approach to their investing.

For more information on how your clients may benefit from a DCA investing strategy, contact your Lincoln representative. And don’t forget to follow us on and for regular insights and tips on income planning conversations.

1Greenwald and Associates, Guaranteed Lifetime Income Study, 2016.

The views expressed in the referenced article are those of the author only and not necessarily those of any Lincoln Financial Group® affiliate. Neither the information, nor any opinion expressed herein shall be construed as a recommendation to buy, or as an offer to sell, any securities or insurance product, a forecast of future events, a guarantee of future results or investment advice.

Lincoln Financial Group is the marketing name for Lincoln National Corporation and insurance company affiliates, including The Lincoln National Life Insurance Company, Fort Wayne, IN, and in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY.

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