Being there for your clients means the tough times along with the good. It’s very easy to be popular when you’re presenting information on growth in accounts, and much more difficult to be seen as the “bad guy” when the markets take a downturn. It’s important to know how to talk to your clients and keep them educated and in the conversation when things are not as great with the economy. Ups and downs are part of your job, whether from market swings, difficult situations for clients financially, or an investment’s failure. Here are some tips that will make sure you know how to tackle these topics and maintain your relationship with your clients. For that matter, these are often the times that are the most important when showing your clients that you are actively working for them and available for their concerns.
- Good Conversations: The number one tool in your belt during any interaction with a client is listening. While clients do want to hear what you have to say about the market, they also have their own questions and concerns. Rather than brushing aside their observations and worries, take the time to fully listen, with your whole attention, when your clients speak.
Part of this means not interrupting, even when you know the answer before they’ve finished asking the question. This is never a good conversation technique, and it has the added effect of making your clients feel that you consider yourself to know more than they do and be talking down to them. It also may completely change the conversation if you don’t let them fully articulate their thoughts.
Without close listening, you may be missing vital pieces of the puzzle that your clients need solved. Their situation is unique, and the solution must also be unique, so it’s important to get full information from your clients. Also, make sure your follow-up questions are insightful and continue to progress the conversation rather than letting it cycle endlessly.
- Keeping Perspective: Clients are often swayed by headlines, and the headlines are not looking great. The numbers look big, and when compared to the swings in their own accounts, clients are of course nervous. One way to mitigate headline panic with your clients is to help them bring the recent market adventures into perspective. Pointing out the actual percentage of the drops relative to the higher index price may help.
Working with your clients and understanding how they perceive market drops can also help you know how to help them during times like these. If your clients see the drop and worry about that loss in value, they will of course be more nervous. If you have clients who see the same drop and see a buying opportunity, their take on the drop will be completely different. Perspective is the difference between these viewpoints, and taking perspective into consideration when preparing your talking points with clients during turbulent times can be a lifesaver.
- Focus on the Existing Plan: As an advisor, you know that market volatility is a fact of life, and it’s unlikely that any client’s portfolio will not have to weather these types of situations, even if the factors that lead to them could be unpredictable and unique. With your level of experience, you have already built safeguards and protection strategies into a client’s plan. Using the existing plan to keep clients focused can be a good way of keeping them away from the panic button.
Reviewing the existing plan with clients allows you to show them that the journey to their financial goals is still on track. This also exhibits your own steadiness and lack of reactionary tactics, which can provide some stability that clients can lean on to avoid making their own drastic decisions based on temporary emotions.
Of course, the existing plan isn’t set in stone. Close conversations with your clients might lead to more shifts in a portfolio if your client feels that they’re at risk with the current holdings. But a shift rather than a sell-off is the goal here, and helping them understand how the plan is structured to weather stormy times can keep them from shedding everything.
- Bigger Picture, Longer View: Along with the reminders of their financial goals and the success of their financial plan, it can also be a good time to help your client take the long view of what’s going on. During client conversations, having examples of previous declines and comebacks can illustrate what you want them to know—that long-term market growth is the actual focus rather than immediate reactions to the current market woes.
Drawing back and showing your client longer periods of their portfolio’s performance can help. Rather than one year, show the portfolio’s progress over ten years, or even twenty, depending on how long they’ve been a client. Zooming out when talking about overall market trends can also help; the drops don’t seem as big when they’re presented in the larger context of a decade or two.
This can all be used to get your clients to understand that it’s impossible to perfectly time buying back into the market, so if they sell off now, they will ultimately have lost potential momentum of an upswing, which can happen just as quickly as a downturn. Again, it’s important to impress on your client’s how dangerous acting on pure emotion is, and while data is a start to helping them understand, the perspective we talked about above is key.
Overall, market volatility is a challenging time for clients and financial advisors, but as an advisor, you have the experience and know-how to help your clients make it through. The bigger work that you do at this time isn’t just the risk mitigation you’re doing in client portfolios, but in managing client emotions and helping them understand what’s going on and how to weather it. Communication is the single most important component of your job at times like this. You can’t fix the market, and clients don’t expect you to, but they do want some reassurances and also to know you’re thinking about them and their concerns while the markets are stormy. This is your time to show them you’re not just there for the good news, but you’re there with the real news.
