08/16/2013 08:13 am ET Updated Oct 16, 2013

Is Your Broker Peddling Fear?

A new wealth management client recently sent me an epistle he received from a broker. It was full of doom and gloom: the GDP is likely in a significant decline again, the economic environment is subject to needs of political expediency, there are pending problems in Japan and the entire banking system is under-capitalized in Europe.

After reading it, even I felt fearful about the future. To ease my client's mind, I mentioned a lot of positive economic news, including: a declining annual federal deficit, record corporate spending on R&D, a rebound in both the housing and auto industries, job growth, a movement towards energy independence, gains in productivity and the return of manufacturing, just to name a few.

Then I wondered -- what possible good does this broker's focus on the negatives in the market do for his clients? I understand how it might be helpful to him. Fear can be a powerful motivator. Creating fear by focusing on the negative and then offering a solution to the impending catastrophe could be an effective method for a broker to gain new clients.

What I don't understand is how does peddling fear help this broker's clients?

Whether by design or not, this broker's email is likely to induce fear in its recipients. When people are fearful, it is almost impossible to think clearly and maintain a steady investment approach. In a moment of panic, people are more likely to sell during a temporary market downturn or hold excessive amounts of money in cash, thereby forfeiting the opportunity for long-term growth.

Furthermore, when people are fearful they tend to want to hold onto their money. They become reluctant to spend it for any purpose, even to make their lives or the lives of others better in the present.

My goal as a wealth manager is not just about growing assets; it's about helping people use their wealth to enhance the quality of their lives.

The purpose of having money is to use it to create the life you desire, enhance the lives of the people you care about and establish a living legacy that represents your passions and values. It is hard to use your money to improve your life when you are feeling scared and anxious.

While I never sugarcoat facts about the market or the challenges our economy faces, I do want my clients to feel empowered and confident enough about their financial futures that they enjoy the present, no matter what the market did on a particular day.

So, here is what I tell my clients:

1. If you are in a well-diversified portfolio, then the daily, weekly or even monthly fluctuations in the market should not concern you. If I were not in the business, I would look only every three months or so. If your portfolio is properly positioned, there are a wide variety of possible future outcomes. There should be plenty of money in safe, conservative investments to protect you from any major market fluctuations.

2. If your money is in the hands of a good manager whom your trust, don't worry about it. Only God knows the future and He is being stubbornly quiet about it. Albert Einstein said, "I never think of the future. It comes soon enough." Of course, as a wealth manager it's my job to think about my clients' financial future. My team and I do that every day.

3. Letting yourself become paralyzed by unwarranted fear about the future can foster anxiety and keep you from enjoying the present and creating the most fulfilling life you can have. After all, most of our fearful predictions never come to pass. As American businessman Arnold H. Glasow said, "Happy is the person who knows what to remember of the past, what to enjoy in the present, and what to plan for in the future."

I don't want my clients to feel anxious and fearful after meeting with me. My goal is to help my clients feel empowered and secure in the knowledge that their money will be there to protect them in the future and make their lives rewarding and fulfilling in the present.

David Geller is the author of Wealth & Happiness: Using Your Wealth to Create a Better Life. He is the CEO of Atlanta-based GV Financial Advisors and is available for professional speaking engagements.