As a new market reality sets in, Bank of America Merrill Lynch has urged investors not to make rash moves with their current investments, and to also consider asset classes poised to profit in current conditions.

“Investors really need to resist the temptation to either sell and to panic, or frankly even to buy on the dips,” said Lisa Shalett, Bank of America Merrill Lynch Global Wealth Management chief investment officer and head of investment management and guidance. “Market timing here is just impossible to do, so we need to continue to think about asset allocation as our anchor.”

That means taking this week’s events as a cue for investors to sit down with a financial advisor to make sure their portfolio is appropriately positioned.

In those conversations, investors need to evaluate whether their equity investments are taking advantage of strong global investment opportunities that are out there, Shalett said. Investment portfolios should also be evaluated to see if they have enough fixed income holdings in strongly performing companies, exposure to non-U.S. sovereign bonds that can come with AAA ratings and tap into growing emerging markets and commodities.

Shalett’s advice was part of an online video panel focusing on market volatility that was presented by Bank of America Merrill Lynch’s wealth management business this week. The video offers a peek into the kinds of conversations the firm may be having with financial advisors and clients now.

Merrill Lynch canceled a Monday conference call involving key executives for the presentation of its semi-annual survey of affluent investors. That came as the firm was working to update its financial advisors around the clock in real time, Bank of America Merrill Lynch Head of Personal Retirement Solutions David Tyrie said in an interview on those survey results.

Are We Headed to a Recession?

“Worries are growing that the U.S. economy is heading back into recession,” Sallie Krawcheck, president of global wealth and investment management at Bank of America Merrill Lynch said in the video’s opening. “Without a doubt, these are challenging, perhaps unprecedented, times.”

Concerns about a U.S. recession are highlighted by the historic downgrade of the U.S. credit rating from AAA, where it has been since 1917.

The ensuing equities sell-off earlier this week fed those recession worries, while Bank of America Merrill Lynch cautioned that those markets have not yet hit bottom. The next level to watch for is hitting 1,100 on the S&P 500 index, which would signal a market down 20% from its high, said Mary Ann Bartels, head of technical analysis at Bank of America Merrill Lynch Global Research.

“Part of investing in equities is having bear markets. It feels so bad because it’s happening so quickly,” Bartels said. “We think the sell off has been so harsh that we wouldn’t panic and do panic type of selling.”

The negative impact on the asset markets and consumer and business confidence does raise recession risk, said Michael Hartnett, chief global equity strategist at Bank of America Merrill Lynch Global Research. For investors, that signals a need to look for key investment values.

“We’ve had 25 years of excess spending, and now we’re going to have a number of years where people have to save. That is going to mean that growth is low, interest rates are low,” Hartnett said of investing conditions. “I think the three words that you walk away with are growth, yield, quality.”

For more on the debt rating downgrade fallout, take a gander at Financial Planning's special report package for details, insight and advice from some of the financial planning industry's foremost experts.