We all are well aware that over the past several weeks the market has taken a wild ride – and it is not over yet. As an advisor, what are you telling your clients when they look to you to explain the recent market volatility and how it will effect their portfolio?
I have been getting this question from students and colleagues a lot recently and, the thing is, I don’t have the answer. Every client and client situation is different. For a more active investor, this is a good time to buy so my advice to them is drastically different from what I would tell a more skittish or conservative client.
But the one thing I am telling everyone is that times of volatility are where we advisors “earn our fee.” It is also a time where we have an opportunity to cement our relationship with the client – and that communication is key.
Let’s focus on the average investor (as opposed to those with a more active approach), which, for most of you, make up the majority of your client base. I suggest that you contact them by phone or email to assure them that you are watching their portfolios, but if they have questions, you are available to discuss their concerns. If you have an older client base – clients that are not comfortable with email – send a letter “snail-mail” and then follow-up by phone.
In your communications, reassure clients that this is not about one week or one month of trading; it is about a lifetime of working together to achieve their goals. Remind them that it is important to stick to their goals and strategies and – as their advisor – that you are with you are with them to help make it happen.
Clients want to know that you are in their corner. There is no right or wrong answer as to how best to contact clients or what exactly to say. You should know your clients’ tendencies and behaviors well enough to be able to address their concerns appropriately. Some may need hand holding while others just need to hear from you and be left alone, and you should work with each of those types accordingly.
By communicating with your clients to proactively address concerns you are cementing their trust in you as a professional and as a person. They will be more likely to take your advice and to stick with you for the long-term instead of chasing trends or the next big thing. They are less likely to blame you for losses, and more likely to refer others to you.
The important thing to remember is to listen to your clients as to why they are concerned and to talk to them about their goals and their long-term plan instead of focusing on this short-term correction. And that a small investment of time used to reach out to your clients can cement a relationship for the long-term.
So what are you telling your clients when they look to you to explain the recent market volatility and how it will effect their portfolio? Feel free to comment and share your experiences.
Source: Brett Danko
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John