At noon EST tomorrow, December 16, the Fed will raise its rate for the first time since June 29, 2006. A lot of your clients have retired since, or were in school then. No matter how much you have heard about the Fed’s pending “liftoff,” your clients will be alarmed by all the yelling, and some by envelopes they’ll get at home in snail-mail not long after New Year's Day. Here's what you need to tell them, and how you need to say it. 1. Speak slowly and carefully. There's no reason to make the alarmed more alarmed. The idea is to provide clarity to them, basic information, and to protect them from all the yelling. 2. Begin by asking yourself: how much will this particular client understand? What’s the information level in my farm area? Hand out only the ornaments appropriate to their conceptual Christmas tree. 3. Do not channel the “it’s a great time to buy” message. Fed tightening is Fed tightening: go light on the lipstick. It may be a great...
- The idea is to provide clarity to them, basic information, and to protect them from all the yelling.
- Banks trade cash amongst each other overnight, every night, and the “Fed funds” rate is the fundamental cost of money. The Fed might raise that rate two or three or eight times without raising mortgage rates.
- "Prime" rates and adjustable-rate mortgages due for adjustment will rise with the Fed.
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