Fear can lead to irrational behavior no matter how well you think you’ve prepared clients for market volatility.
What are the takeaways?
- Send out a personal communication to all your top clients highlighting what’s happening, its impact on them and your action plan.
- Make this sort of communication commonplace; empower a Director of Planning or Investments to send ongoing communications to top clients.
- Consider hosting a webinar for top clients to share insights and field questions.
- Create a new page on your site dedicated to the “client journey.”
So in light of all the recent market volatility around coronavirus and the fears of it becoming a pandemic, I wanted to record this week’s Wednesday Wisdom on the importance of proactive client communication during market volatility. And I’ve recorded videos and audios like this in the past, but I’m always reminded that I need to keep, and consultants need to keep, reminding advisors of these best practices. When I see folks post on LinkedIn and Twitter things like, “My clients are well trained to understand the long-term financial plan. Our clients don’t worry about the short-term market underperformance, and we’ve had no client inquiries at all around what’s happening this week.” And to those advisors, my message is there is nothing more powerful, no matter how good you are as an advisor, no matter how much conviction you have around messaging, there’s nothing more powerful than the media or any marketing medium or channel instilling fear and or greed into the mind of the consumer.
There is nothing more powerful in getting people to act irrationally or just act quickly and make decisions period. And so, you can reassure clients a million times over the course of your relationship with them that you’re focused on the long-term plan, and staying invested, and all that jazz. But when they’re hit with thousands of different messages a day, whether it’s online, on social media, in the workplace, when talking to their neighbors, when putting on the TV, when listening to a podcast, that message you gave to that client at your last review meeting six months ago stands no chance around all the other messages they’ve received. And so here’s a couple of things I think advisors could do, using this as a learning experience this week to be more powerful about your communication moving forward.
By the way, I’m also speaking to the advisors who are on the flip side of that equation, who have to shut down work in the office for a whole week and not take calls from anyone because they’re so busy reaching out to clients around what’s happening in the markets and trying to keep their ship afloat as the market tumbles around them. Those advisors as well are ill-prepared in terms of how they’re managing clients, and managing their client portfolios, are ill-prepared for a scenario like this. And so both advisors would benefit from these four things. Number one, getting a quick proactive communication out to clients in the way in which they want to be communicated with. So for most people, especially your Gen X-ers, your Gen Y-ers, your young baby boomers, that’s going to be email. For maybe your older folks, that’s going to be a quick phone call highlighting three things.
Number one, acknowledging what they’re hearing. This is what you’re hearing and this is what’s happening right now in the markets and in the marketplace. Number two, this is how it impacts you specifically as an investor, as a client, et cetera. And number three, here’s our action plan. Here’s what we think you should do and here’s what we’re going to do. And in most cases, the answer to that is going to be we’re going to do nothing because of X, Y, Z reason. But in some cases, you may actually ask them to do something or you may be doing something to their portfolios and you quickly want to acknowledge that to them. So acknowledging what they’re hearing, talking to them about how it impacts them, and then giving them an action plan around what’s going to happen.
So that’s the first thing. By the way, this is the reason why an advisor should not be managing more than 20 to 30 top, not all, but top client households in their book of business. Because you need to be able to manage communication for your very best people who have all their investments with you very quickly. Now, which leads me to my second point. If you have a director of investments, by the way, theoretically they should be teeing up this communication for you. Many folks, many advisors have directors of investments on their teams who do nothing more than process new business and open accounts. Directors of any department should be thought leaders in that space. And so my second best practice to you is, ‘make this type of communication commonplace’. In other words, have your director of investments send out, whether it’s weekly or monthly, insights from your office, from your firm, talking about what’s happening in the market, how it impacts them, and what they should do about it on a continuous basis.
Now, for my broker-dealer folks, you’re probably thinking, oh, compliance and how am I going to do this? And most of your firms have messaging that they send out to you. I would summarize that in a couple of quick, easy bullet points in your voice. Or I would start isolating your 20 to 30 households that are most important and crafting a message that can go to them individually that doesn’t have to be compliance approved. Now, if I have any compliance folks listening, they’ll probably reach out to me about that point, but that’s my best practice for you. So making this a commonplace in your practice, think about this. Clients are hiring you not only to be their financial advisor and help them implement, but they’re hiring you to help interpret all of the information that exists out there for them.
And so if you’re not positioning yourself as a thought leader, and you’re not consistently educating clients about what’s happening within the discipline that you are supposed to be an expert in, then I would argue if you’re not living up to your value proposition. And so continuous communication, starting after this week around the markets, whether it’s on a monthly or weekly basis. That leads me to the third point. You may also consider hosting a monthly webinar the way some investment firms do, where people can dial in and listen to the thought leaders speak about the markets or speak about wealth management, and hear what the practices, thoughts, and insights are on what’s going on. Again, we want to position ourselves as thought leaders so that when news like this does happen, when something like this does happen in the markets, clients feel assured that they can come to us and our team for answers, and that they are safe in our hands as advisors.
My fourth best practice is you’ll also want to consider putting something on your site. Whether it’s a separate page or tab on your website, which you can promote on social media, of course, that guides clients digitally in a time like this. So for example, you may have a section on your site that is dedicated to helping clients navigate market volatility, and maybe that page on your website is all around the steps you should take when the markets are taking a bath. Or how to navigate through feelings and irrational behavior from facts. And on this page of your site, maybe you’re giving clients all of the stats that I’ve been reading on LinkedIn this whole week around the reality of market volatility throughout the year, and how the market has X number of many corrections throughout the year, and how this isn’t all that odd if you think about the market as a whole.
These are really important tidbits that the average investor needs to be aware of, because for them looking at this moment in time as an isolated incident feels like the end of the world for them. And so educating clients around the reality of the markets, providing them with some really great pieces around the power of rational behavior, and allowing them to click on those pieces and maybe read through a quick client journey almost of, “Hey, we recognize what you’re probably feeling right now. Here are the things you should remind yourself up. Here are some facts and information that may help you sift through this. Feel free to call us, but here’s a quick reminder of why you should stay calm.”
Therefore, this now becomes a part of your culture. Like teaching clients how to self-coach and educate themselves simply becomes a part of your culture as a thought leader in this space. And so I hope these best practices were helpful. Of course, let us know how they work. Good luck and I will speak to you same place, same time next week. Take care.