The events of 2008 damaged investor confidence and trust in two important respects.First, many investors saw erosion in the confidence and trust in their advisor and financial institution.And second, many investors have become dubious about the long term merits of investing in the stock market.

For many clients, the top priority for advisors is to rebuild confidence and trust both in them and in markets.

After the tech wreck of the early part of this decade, many Canadians took a skeptical view towards high tech stocks generally and especially towards start ups.

Today, many Canadians are looking skeptically at ALL stocks.

At a certain level, given last year's dramatic decline, the ongoing unraveling of financial institutions and the continued market turmoil, this is understandable.

At the same time, for many Canadians, shying away from investing in equities will make it impossible to achieve their long term goals. In many cases, the primary job for advisors today is to help their clients understand that and to help rebuild confidence that markets will be a good place to be going forward.

Here are five elements of a conversation you may want to have with clients to help achieve that:

1. Start by addressing soft issues

Having a productive conversation about markets often means starting with a client's emotional response to the decline in their portfolio. Until you deal with a client's "soft issues", you can't get them to focus on the hard issues related to their plan and portfolio.

Consider starting by saying something like "Many people lost sleep as a result of the markets last fall. How did you find last fall's market affecting you?". Having asked the question, sit back and really hear the client out - the time you spend on this first stage is essential to get clients feel listened to.

And don't forget to let clients know that you understand how tough they found this - clients also want to feel their advisor empathizes with their situation.

2. Go back to client objectives

The next stage is to revisit the client's objectives and plan to achieve those objectives.

If your client can hit their long term goals with a return of 4% or 5%, then staying away from stocks can be a rational response.

The hard reality is that most clients will need a significantly better return than that to hit their retirement objectives - to retire when and how they want to. It may be worth demonstrating the implications of lower returns - the need to save more, work longer or scale back on the standard of living after retirement (and in some cases all of the above.)

3. Point out the extent to which last year was an aberration

Last year's decline was one of the most extreme on record; you have to go back to the thirties to find an equivalent drop in markets. You might want to start by walking clients through one of the commonly available charts showing the distribution of long term returns; these can be obtained from many fund companies.

Going back to 1925, these charts show that stocks returned an average of 10% and made money 70% of years. These also show just how unusual last year was. (If you scroll down the right hand side of the getkeep.com website, you'll see a section titled Powerpoint that shows some of those charts).

In some instances, be prepared for a skeptical response - some particularly cynical clients take a jaundiced eye to these charts, seeing them as a "sales pitch" on the part of their advisor. Try to avoid charts that have the logo of a money manager or fund company - these can be red flags for some clients.

4. Talk about today's opportunities

The next step is to discuss the opportunities in today's market.

There are two ways to do this. One is to have a macro, top down conversation, discussing market valuations and price earnings multiples. This can work in some cases, but will not be persuasive in others - in some cases clients won't understand this, in others they have heard this in the past. The other difficulty is that having a rational conversation about valuations doesn't address the real issue for many clients - their fear and emotional response to last year's events.

A better approach might be to focus on individual stocks that clients are familiar with. Consider companies like Shoppers Drug Mart, McDonalds, Walmart, Procter & Gamble or Johnson & Johnson. These are all household names for which you can make a compelling mid term case, whether it be as an individual stock or as a top holding in a mutual fund you recommend, even with all of the immediate uncertainty facing us. In today's environment, a bottom up, company specific conversation will often engage and reassure clients in a way that top down, valuation focused conversations won't.

5. Discuss the best way to reenter markets

It's always important to talk about the possibility of markets declining in the short term - but especially so today.

If clients buy into your argument, you need to have a discussion about how impossible it is to predict short term market fluctuations. You can point to one of the charts showing how markets have bounced back after the kinds of declines we saw last year, but also need to acknowledge the possibility of continued tough times in the immediate period ahead.

In light of that, you need to talk about how to enter markets. In some cases clients will be prepared to commit fully now, in others they may want to wait until there are clear signs of a market recovery, being willing to give up a gain of 20% or more to do that. (The other problem with waiting for a run up to reenter the market is that markets never move up in a straight line - and a 20% gain can be immediately followed by a 10% pullback.)

For many clients, the best solution might be a staged approach, investing in stages over a period of twelve or eighteen months.

This conversation won't always be an easy one - and in some cases rebuilding confidence that markets will be a good place to be long term will be a tough task, requiring repeated discussions.

Just because a conversation is difficult, howeve, doesn't mean that it doesn't need to take place. In many cases, this is the most important message that Canadians need to hear from their advisors today - and one way that advisors will prove their worth and deliver real value to clients going forward.