What to Say When You’ve Said It All
Dan Richards*
January 20, 2009


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Part Two: Where we are today

Effective conversations today need to have both a rational and an emotional dimension – we can’t relate to clients and establish empathy by just focusing on the facts.

Going into conversations these days, we need to understand the magnitude of the stress that many clients are experiencing – exacerbated by the non-stop, 7-24 media coverage of “today’s economic crisis.” This is especially true among seniors, who have the time to spend their days glued to the television set, fixated on words like “meltdown” and “depression.”

Start by acknowledging that recent market conditions are truly challenging, well beyond what any of us could have anticipated a year ago, six weeks ago or even last week, as the market re-approached its November 2008 lows.

You could begin by saying : “Virtually no one saw this coming – even the smartest and most experienced investors failed to anticipate the effect that unwinding the excesses of the past few years would have on financial institutions and on the financial system.  As examples, we have no further to look than the veteran money managers at Bear Stearns, Lehman Brothers and Merrill Lynch who were caught completely off guard.”

You might then continue:  “And it looks almost certain that we’re going to have to get used to continued high levels of volatility and ups and downs for the next while at least. Two economists at the University of Toronto captured today’s reality when they released a report titled ‘We don’t have a clue and we won’t pretend we do’; in a world where the dollar fluctuates by 5 cents and oil by $10 in a day, anyone who claims they can make accurate short term forecasts on the economy or stock markets is kidding either themselves or you.”

“The one piece of good news – offsetting all this uncertainty, there is strong evidence that valuations have reached the point where they are truly depressed.“

It’s important here to reinforce your credibility by introducing new information from a credible source, focusing on facts rather than opinion.

“A recent Wall Street Journal had a feature called ‘What History Tells Us About the Market,’ detailing how almost four in ten stocks tracked by Standard & Poor’s are trading at less than half of long term market valuations and one in ten are trading below their current holdings of cash.”

Here’s the link to this article – note it will only be available for a limited period of time:

WSJ.com - What History Tells Us About the Market*

Next, engage your client by talking about the current challenges facing the market. Take a piece of paper, write “Today” at the top and draw a line vertically down the middle, saying something like:

“Let’s talk about where we are right now.”

Go on to ask: “What are the issues that concern you about the market over the immediate period ahead?” - jot down their concerns on the left hand side of the page.

Once clients have told you what worries them, encourage them to continue by saying “What else is there? Anything else that concerns you?”  Be sure to listen without interrupting – it’s critical that clients get a chance to vent their fears.

After they’ve aired their concerns, ask clients to identify what they’re most anxious about. Then say something like “Tell me more about why that worries you.”

Probe each of their concerns in turn – in some cases you may find that investors are worrying because of something they read or heard that they have misinterpreted. One advisor I talked to had a client come in late last week wanting to sell everything because he’d read that the credit crunch would devastate the economy – it turns out that this client didn’t really understand what a credit crunch is beyond that it’s a bad thing; a conversation about past lending crunches had the investor leaving the advisor’s office reassured and with his investments intact, at least for the present.

Then go on to say: “Those are certainly causes to be concerned. Let me mention a couple of other things that are hanging over the market right now.”

Some candidates for causes of short-term concern:

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