After more ugly days on the markets, many investors' anxiety levels are hitting new highs.In some instances, it's a result of seeing the steady decline in the value of their portfolios. In other cases, the anxiety is prompted by growing media reports of economic woes ahead of us - the U.S. in recession, the United Kingdom and Europe about to enter one, slowing of growth in China, the Bank of Canada downgrading its forecasts for the Canadian economy. Certainly, there's no shortage of bad news these days - earnings disappointments; Chrysler in deep trouble; declines in housing values here in Canada.

Given the level of anxiety, telling clients to hang in there, that portfolios are well positioned and that we'll get through this isn't sufficient. We need to counter fear and anxiety at two levels - first at the emotional level, by empathizing with them, communicating that we understand how difficult a period this is for them and ensuring we take the time to hear them out. This is step one - don't rush through this, take the time to ask questions about how clients are feeling, then sit back and listen. If clients don't feel a connection at an emotional level, the conversation stops there.

Next we need to address client concerns at the rational level, with facts, not opinions. And the more credible the source for these facts, the better - that's why Warren Buffet's article in the New York Times was so widely distributed and why an article from a prominent Princeton economist in the Wall Street Journal works better than one from a community college prof in a local paper.

One of the best respected observers of the business scene and markets in the Canadian media is Derek DeCloet of the Globe and Mail. Bringing a healthy dose of skepticism and a balanced perspective, he's viewed by many in the financial community as one of our more insightful media voices. That's why his column this morning describing today's investing environment as "the best of time and the worst of times" may be helpful in providing perspective to concerned clients.

To read Derek's column, go to http://www.reportonbusiness.com/.

In markets like these, the central role for financial advisors is providing clients with an objective, fact based view of the prospects ahead. I'll repeat a view I've stated before - the most important function for advisors is to serve as an emotional anchor, to keep the highs from getting too high, the lows from being too low. That doesn't mean being a market cheerleader and ignoring the very real issues for economies and markets - it does mean providing some objective balance to the overwhelmingly negative sentiment that prevails.

As clients stress about the impact of a deep global recession on their portfolios, it may be helpful to remind them that we've been there before - and to share two separate analyses of how markets behaved in past recessions that were recently released by respected market veterans.

One is by Michael Nairne of Tacita Capital, the other by Sandy McIntyre of Sentry Select. Both can be accessed in the Client Commentary section in the upper right hand column of this site.

Without question, these are very tough times for investors and advisors alike. But it's in exactly these kinds of markets that advisors demonstrate their value, by helping bring credible perspectives and relevant, fact based lessons from the past.