How to help your clients through market volatility
Financial advisers don’t manage money; they manage people. And people, as we all know, sometimes act irrationally. Investor behaviour during periods of market turbulence is a prime example.
It’s been a choppy week on the global stock markets, with sharp falls in the US on Monday and again on Thursday and the usual knock-on effect in other parts of the world. At one point, we’re told, so many customers were trying to sell stocks that the websites of the US robo-advisers Betterment and Wealthfront crashed under the strain.
What does all this mean, then, for traditional, face-to-face advice firms? Here are some things you might want to bear in mind.
This is when you earn your fees
Remember, it’s precisely at times like this that financial advisers come into their own. If they can stop a client panicking and bailing out, they can earn their fees several times over. Simply putting people’s minds at rest is providing a valuable service. You should see episodes like this, therefore, as an opportunity to demonstrate your true value.
Your clients need to hear from you
Just because the phone hasn’t rung, or no one’s emailed you about it, don’t assume that all your clients are perfectly chilled. Some may be suffering in silence. So, don’t wait to hear from them; it’s up to you to communicate first. And don’t hang about. To quote Winston Churchill, “A lie can travel half way around the world while the truth is putting on its shoes.”
Use social media
Almost all of your clients, and potential clients, use social media. You should too. It only takes a few moments to reassure people. Your message could be as simple as this message posted by David Andrew at Capital Partners in Perth, Australia, on Tuesday: ”Ladies and gentlemen. This is the Captain speaking. Please return to your seats and fasten your seat belts while this turbulence persists.” Perfect. Just the job.
Share appropriate content
Yes, there’s plenty of nonsense written when markets fall; equally, there’s some excellent content out there too. Seek out helpful articles, videos and graphics, and share them. Better still, produce and share your own — both on social media and via email. Remember, too, that personalised emails are far more effective than a mass mailshot.
Acknowledge people’s feelings
Investing your life savings is a big deal. It’s no surprise that people react the way they do to seeing the value of their portfolio fall before their eyes. It is, therefore, especially important at times like these to listen rather than talk, and to acknowledge the genuine and perfectly natural emotions that people are experiencing.
Focus on the plan
Successful investing is all about having a plan and sticking to it. Try to move the conversation away from numbers and possible outcomes, and focus instead on the plan. Remind clients that volatility is part and parcel of equity investing, and that they’ve already prepared for corrections, crashes and prolonged bear markets. Nothing has happened that requires a change of course.
As all advisers know, the media tends to be part of the problem rather than the solution when markets go haywire. If someone’s worried about the markets, reading the financial pages or watching CNBC is unlikely to make them feel any better. Anxious clients would be much better off avoiding the financial media altogether and actively seeking distractions, like losing themselves in a book, visiting a friend or going for a long walk.
Education, education, education
Of course, nobody knows where the markets are heading next. The latest falls may turn to be just a correction; they could, on the other hand, mark the start of a protracted bear market. Either way, it’s hugely important to educate clients from the outset — and to keep reminding them — about the inevitability of volatility and periods of negative returns. That means investing in educational content and resolving to share it on a regular basis. And, while you’re at it, why not produce a timeless video now that you can use the next time that market jitters strike?
ROBIN POWELL is the founder and editor of Adviser 2.0. A freelance journalist, he runs Regis Media, a specialist content marketing consultancy for financial advice firms around the world. You can follow him on Twitter and on LinkedIn.
Regis Media, which produces Adviser 2.0, has a wide range of videos and articles that can be branded for financial advice firms. This includes content specifically designed to reassure investors during periods of market turbulence. Visit our website and YouTube Channel, or email Sam Willet or Christina Waider if you would like further information.