On Tuesday, I outlined a top down approach to get clients to look beyond the current market issues, using a conversation about macro, big picture issues and trends.Today's commentary provides a different slant , taking a stock specific, bottom-up approach instead.

Recent posts have outlined the five key factors that set the framework for any effective client conversation:

1. Ask good, well thought out questions to ensure your client's concerns and agenda are tabled and dealt with first

2. Get clients engaged and participating in the conversation

3. Focus on facts rather than opinions - introduce concrete evidence from credible sources

4. Ensure you're positioned as a source of objective advice rather than a salesperson pitching products or a market cheerleader - provide a balanced perspective, dealing with both upsides and risks to your recommendations

5. Bring an attitude of confidence and reasoned optimism - don't pretend issues and problems away, but also help clients look past current concerns

With these guidelines in mind, you have a chance to bringing facts about specific stocks in a balanced, fair-minded fashion. There are two parts to this conversation - pointing to the value that exists right now in beaten down stocks and providing prudent reminders.

Pointing out the value that currently exists

Table a list of top holdings in a fund you support or companies whose stock you like. Focus especially on established, well known companies such as McDonalds and Procter & Gamble that clients can relate to as consumers. If you and your client are risk averse, consider staying away from resource based stocks or financials that may be especially vulnerable to additional unpleasant surprises in the next while (although a strong case can be made for the risk / return ratio of leading Canadian banks like RBC, Scotiabank and TD).

Once you've picked two or three companies, start by showing their share prices today, compared to historical levels. Then show estimated profits for this and next year, along with the resulting PE multiples, comparing those multiples to historical levels. Finally, introduce the dividend yield on those companies.

By focusing on individual companies rather than market prospects as a whole, clients are more likely to walk away feeling reassured about their investments. You can also make the point that even should we see further market declines, the dividend payout on these companies puts a floor on their price and pays investors to be patient until markets recover.

Adding prudent reminders

Remind clients that markets can stay both overvalued and undervalued for extended periods of time - and stocks are priced irrationally during those periods - but do ultimately revert to their true value. Make the point that clients with the financial ability and psyche to hang in will almost certainly be rewarded over time.

Just one example to remind clients of. On the day in early 2000 that 3Com divested itself of part of its interest in Palm, the spin-off's share price soared and at one point 3Com's remaining interest in Palm exceeded its total market value; in essence, the market was assigning negative value to the balance of 3Com's business. The valuation of Palm made no sense - and is an example of how market sentiment can elevate or depress valuations in the short term.

This may or may not lead to a conversation about your client taking cash off the sidelines and putting it into the market. If you and your client do decide to deploy cash, ensure they can live with a continued drop in markets - your credibility is at risk if you fail to have a conversation about the possibility of continued declines in the short term.

For the same reason, if you and your client do end up heavying up their equity weighting, consider phasing this in over the next quarter.

I began Tuesday's post talking about the paramount goals for advisors today - keeping clients invested and keeping them invested with you. Many clients are looking for proactive advice to take advantage of the recent market turmoil - for those clients, the conversation described above can help you achieve both of those goals.