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Market volatility is an inevitable part of the financial landscape, yet every spike in uncertainty brings a new wave of client anxiety.
For RIAs, advisors, and investment managers, these periods are a true test of relationship management, communication skills, and professional value. When your clients are “freaking out,” your approach to communication can determine whether you retain their business — or lose them to a smooth-talking competitor who excels at soothsaying.
With investors experiencing heightened anxiety about their financial futures, your approach can make the difference between client retention and attrition. This comprehensive guide from our senior consultants explores actionable strategies for effective client communication during market volatility.
Understanding investor psychology during turbulence
When markets plunge, client reactions stem from deeply rooted psychological responses. Loss aversion bias plays a significant role, as research consistently shows that the pain of losing money feels approximately twice as powerful as the pleasure of gaining the same amount.
This explains why even the most financially sophisticated clients may react emotionally during downturns. Recency bias (also known as availability or salience bias) further complicates matters, as clients tend to overweight recent events, making market downturns feel permanent rather than cyclical.
This distortion is amplified by today’s 24/7 financial news cycle, which bombards clients with alarming headlines and catastrophic predictions, often without historical context.
Wealth management professionals who address these psychological underpinnings directly can help clients regain perspective and avoid emotionally driven decisions that can compromise their long-term financial goals.
During turbulent markets, clients are not just worried about numbers. They’re concerned about their future, families, and financial security. Research and industry experience consistently show that clients judge their advisors not solely by portfolio performance, but by how well they are kept informed and supported during challenging times.
Advisors who dependably communicate, educate, and empathize with their clients are far more likely to retain business and build trust, even when markets are down.
Be proactive, not reactive
One of the most critical mistakes some advisors make is waiting for clients to reach out in panic. Industry experts know how to flip the script: They initiate contact, offering reassurance and guidance before clients have a chance to worry themselves into rash decisions.
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Send timely market updates: Frame them in plain language, avoid excessive jargon, and focus on what the volatility means (or doesn’t mean) for the client’s unique situation.
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Segment your book: Use a cutting-edge CRM specifically designed for wealth management experts to identify clients most at risk of stress or those with more aggressive portfolios, and prioritize them for immediate messaging.
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Personal outreach: Schedule calls or send personalized emails to your most significant client relationships. These should be calm, reassuring communications, not reactive panic calls. A simple, thoughtful, individualized check-in to see how they’re feeling about recent market moves goes a long way.
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Consider content marketing: Social media, blog posts, or webinars that offer consistent, positive guidance and a forward-thinking outlook will help boost your reputation as a subject matter expert and trustworthy fiduciary.
This targeted approach ensures you connect with the most vulnerable clients before their anxiety turns to ill-advised action.
Educate and explain: Demystify volatility
Clients are continuously surrounded by headlines and market commentary that often fuel fear. Your role is to provide clarity, context, and education.
Financial anxiety is deeply personal. People aren’t just worried about numbers on a screen, they’re worried about their retirement, their kids’ college funds, or the business they’ve built for decades. Avoid dismissive phrases like “don’t worry” or “this is just noise.” Instead, validate their concerns while reinforcing the strength and intentional design of their financial strategy:
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Explain the causes: Offer clear, fact-based explanations for what’s driving volatility, whether it’s economic data, geopolitical events, or sector-specific issues. Avoid unnecessary commentary and stick to the facts.
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Behavioral finance insights: Help clients understand how emotions like fear and greed can drive poor investment decisions, and why sticking to a plan and big-picture thinking is crucial.
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Historic context: Remind clients that volatility is a normal part of the financial landscape. Use historical data to show how markets have recovered from past downturns, reinforcing the value of long-term investing.
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Portfolio resilience: Shift client attention from market movements (uncontrollable) to financial planning elements within their control. Discuss potential tax-loss harvesting opportunities, rebalancing strategies, cash flow management adjustments, and retirement contribution considerations that might be appropriate in the current environment.
Perhaps most importantly, steer clear of making specific market-timing predictions. Instead, acknowledge uncertainty while expressing confidence in long-term market resilience, based on historical precedent and your own expertise, rather than crystal ball forecasting.
Leverage the latest tech
Modern advisory firms and RIA models can leverage technology to maintain high-touch service even when client anxiety peaks across their entire book of business:
- Client portal dashboards that visualize long-term progress rather than short-term fluctuations
- AI-powered, individualized email updates addressing specific portfolio characteristics and positive outlooks
- Custom market-volatility and diversification resource centers on your firm’s website
Remember: Clients are likely consuming significant financial media during this time of uncertainty, and now is the perfect opportunity to position yourself as a voice of reason within that information stream.
The most skilled advisors stand ready to transform today’s market turbulence into relationship-building opportunities. At TERRANA GROUP, our senior consultants are ready to help today’s wealth management pros navigate whatever the future holds. Reach out to us today!
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