Navigational Tools to Lead Clients Through Volatility

For financial advisors, this is roll-up-your-sleeves time. Even if your clients aren’t openly expressing their unease, it’s a safe bet they are trying to understand the economic cycle unfolding before them. Even if you don’t have all the answers – and nobody should expect that of any financial advisor – the key is transparent communication, now more than ever. Remember, for some clients, this might be the worst economic cycle they’ve been through and, as their advisor, you represent a life raft they should be able to board.

Client relationships in times like these can be nurtured in a basic four-pronged approach.

Be the calm voice of reason

Be empathetic. Financial goals are life goals. If someone perceives those life goals are being threatened or slipping away, that is incredibly stressful.

Your clients might have varying degrees of financial sophistication, but you’re the professional they all look to at this moment. Even if you have always coached your clients to focus on long-term goals and perspectives, it’s human nature, especially during these down-market periods, for clients to focus on account balances and near-term portfolio performance.

Remember how scary market volatility can be for your clients. Hear and respect their fears and concerns, even when you might be feeling the weight of the world while trying to balance both client inquiries and the pressure of keeping all those client accounts on track.

Add value with each client interaction

While these market cycles often lead to increased interactions with clients, ensure those interactions are bringing some value to both you and your clients.

Sometimes this means not immediately reacting to a client inquiry with a phone call when you don’t have anything new or specific to add. Clients will appreciate that you’re paying attention to them, but no client wants to hear that you don’t have answers to their questions.

Make it a touch point by letting them know you got their call, but before you respond make sure you have something valuable to offer. In other words, make sure your clients leave every interaction with more than they came with, because it’s better to take your time with a well thought out response than to try and put out fires.

One way to add value to client interactions is to stay ahead of headline issues and client concerns. If you, your firm, or a publication you follow has interesting and educational articles, proactively share them with your clients on a regular basis.

Your clients want to know they’re in good hands and that you’re on it. Make sure you get credit for your hard work by sharing your thoughts and show them the effort you’re putting in.

Leverage (and reevaluate) your fintech partners

Lean on your technology providers. Many platforms and tools offer multiple ways to present your clients with specific examples of where they are in terms of their investing, saving, and financial planning goals.

In times of market and economic unrest, it can be easy for clients to only focus on the single data point of the current size of their investment portfolio. But modern sophisticated portfolio management and analytics platforms can help you put the stock market and economic cycle in context by illustrating longer-term patterns and cycles.

These presentations can be the differentiating factor that helps reduce and limit the fear and emotional reactions that can lead to negative investing and financial planning outcomes. And don’t overlook the opportunity to reevaluate client risk profiles.

Applying the fear-and-greed drivers of so many investing actions and reactions, it’s easy to understand how some clients can assume a higher risk tolerance when only seeing the potential upside. Times like these are perfect opportunities to remind clients why and how their portfolios are constructed with their specific risk tolerance in mind.

Inventory and revisit your various fintech partner relationships.

The pace of technological innovation and evolution is constant. Wealth management firms and advisors should be using times like these to evaluate the digital experience they’re providing clients in terms of personalized and tailored communications and more frequent touchpoints.

Considering most consumers have come to expect a fully interactive digital experience in most forms of commerce and communication, it is crucial for financial planners to keep up. Your clients quickly recognize technology and digital interactions that seem subpar and will appreciate your effort to align their experiences.

Empower clients with the facts

Ignorance is not bliss when it comes to someone’s life savings. You should expect your clients to fill any voids in understanding the complexity of the financial markets with the flood of mixed and misleading messages from every direction across the internet, media, and social media.

Educating your clients gives them a sense of control and comfort and the best way to accomplish that is by putting things in perspective. For example, most clients will be less interested in the history or origins of the current economic challenges than they are with how it will impact their own lives.

Taking the time to explain the steps being taken to address the current economic challenges will help. For instance, you can explain how the Federal Reserve’s more aggressive tightening policy will address inflation, ensuring they understand that the resulting higher interest rates are a necessary reality to help slow inflation and potentially dampen the impact of an economic recession.

Regarding the stock market downturn following the peak of late last year, clients will likely find some comfort by better understanding the natural upward bias of the equity markets. That can be illustrated by the fact that, historically, the average bear market has lasted about one year and nine months, while the average bull market has lasted five years and two months.

Ultimately, bear markets, inflation, and interest rates affect a client’s ability to meet their financial goals. And financial goals remind people why they’re investing in the first place and help keep them focused on what’s important.

James Rockwood is the CEO and founder of CapIntel, a B2B financial technology company that aims to streamline time-consuming tasks for advisors and provide quick perspectives on a client’s investments and proposal developments. After working in the financial industry for several years, James recognized the need for a digital transformation and set out to do just that. Now, over 10,000 financial advisors use CapIntel’s proprietary technology to enhance advisor-client relationships and client outcomes.

Read more articles by James Rockwood