I recently had a conversation with an investor who expressed frustration regarding her financial advisor’s lack of urgency in reaching out to her after the recent market adjustment earlier this month. In these times of market volatility, how much volatility is enough for you as an advisor to feel inclined to reach out to your clients? I’ve heard some investors say that several days in a row of 300-400 points would get their attention, for others it might take much less. With the anxiety around the recent market correction, it is tough to know how to react in front of clients. On the one hand, you don’t want to overreact and cause unnecessary concern for your clients, but on the other hand you don’t want to leave them feeling as though they aren’t getting the attention or information they deserve. Here are some tactics to consider, and some to start implementing today, to avoid frustrated investors in the event of another market change:
Communicate clearly: In any instance of volatility I’d like to hear one of the following things from my financial advisor: 1) It’s volatile enough that we’re changing our approach to accommodate, 2) We don’t know enough yet to determine the approach, but we’re staying on top of it so you can relax, or 3) The approach we’ve outlined is working even with the volatility so we’re staying where we are.
Reach out to them so they don’t have to reach out to you: Do your best to reach your clients before they reach you. You are obviously more on top of the market than they are, but with such frequency of reporting and access to so much information, you never know how immediately your client-base could be informed and potentially alarmed. Following the steps below will put you in a position to react as effectively and efficiently as possible.
Prioritize: You clearly can’t get to all of your clients at once. In this case, it’s important to understand the types of clients you are dealing with so you know who to reach out to first and how. Understanding how each of your clients are inclined to react isn’t an easy task, but there are tools to help you determine this. A simple survey administered to each of your clients about how and when they’d like to be communicated with can help you prioritize. There is also software, such as Riskalyse that asks your clients behavioral investment type questions to set their range for risk parameter. Once you determine this for your clients, enter this information into Salesforce so that it’s easily accessible.
Create clear messaging: Elaborate on the points above in “Communicate Clearly” so that you can easily and accurately address any questions your clients may have in each of these scenarios. While you won’t be able to plan now to address the specifics of a particular market reaction in the future, you can certainly plan for any generic answers to questions so that you can more quickly detail out the specifics in the moment that a change occurs.
Plan: Have this process in place NOW, don’t wait until the next drop in the market. You’ll be calmer in this case because you’ll have the flexibility to actually move assets if necessary, and your clients will be calmer because you’ll be ahead of the game on their concerns, and have the poise to react appropriately to their questions.
Use automation: Set up a generic email for those clients who would be comfortable hearing from you via email initially before getting an actual call. Create something simple. Indicate that you’re addressing the recent market activity, and will be reaching out to them to answer any questions or notify them of any necessary follow up on their end. Have this email ready to go out (but protected so that this doesn’t happen accidentally) in the event that a market change occurs.
Consider who should deliver the message: Once you understand how certain clients react, know how and when to use your team members. Depending on your relationships with clients, you may want to have less senior partners focus on scheduling and planning client outreach, so you’re free to deliver the message. Your team members can then be used to field additional questions later, only after you’ve personally spoken to each client.
Coaching Questions from This Article:
Thinking back on this most recent market adjustment, what interactions with clients informed you of how to deal with the next?
How familiar are you with your clients in terms of their potential reactions to market changes?
Do you have a plan in place to address a volatile market, and does it effectively use your knowledge of each client and the role of your team?