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You and your clients had a plan coming into 2020, but it’s been scrapped. Even the most prepared financial advisors couldn’t have anticipated this global pandemic, forcing the creation of new roadmaps and safety nets for unimaginable circumstances.
Historically, clients have relied on financial advisors to turn their life goals into a reality. In the current climate, however, they are tasked with much more. In addition to portfolio performance, clients want to talk about the coronavirus, readjusting their expectations in this “new normal,” civic unrest, and the changing dynamics of how to conduct everyday business.
Advisors must develop their softer skills so they can meet the needs of their clients with both compassion and empathy, all within an increasingly remote and virtual atmosphere.
Embracing the softer side
Social distancing practices are for physical safety, yet people are still looking for guidance and a personal connection to help them get through this difficult time. To keep up, financial advisors need to be able to demonstrate that they empathize with what their clients are experiencing.
Stress and anxiety levels are higher than during the Great Recession of 2008–2009, with 53 million more people saying they felt significant worry on any given day this spring compared to last summer. The emotional and financial strain clients are feeling may not go away any time soon: 82% of investors anticipate the pandemic will affect their lives and legacies for years to come, and 54% of wealthy individuals worry they might not be able to pass their wealth on to successors.
Research shows that emotion is behind as much as 70% of customer behavior, which explains how pandemic-related anxiety has led to a spike in customer engagement and demand for personalized financial planning services. On the bright side, since the virtual nature of today’s work allows advisors to “see” more clients more frequently, they can help allay worries in real time and steer clients away from the perils of impulsive choices. All it takes is a 10-minute phone call or video conference – but it’s important to use those minutes wisely.
Temptation to time the market
What makes a great financial advisor stand out from a good one is the ability to connect with clients. Emotions are a key ingredient in the recipe for client retention and strong performance.
Even before 2020 took a left turn, research made clear that the temptation to time the market and chase performance was one of the greatest risks for investors. Of course, no one necessarily likes to think they are at the mercy of their emotions when it comes to making important decisions, which places advisors in the delicate position of tactfully speaking up when necessary.
