With the equity markets down between 5 and 10 percent for these past two months (depending your index of choice), this January and February have been one of the worst starts to a year in decades. All indicators point to a period of continued volatility—unfortunately not caused by the markets rebounding. Investors feel fear and uncertainty, and they’re talking with their wallets—moving over $200 billion into cash since the middle of last year. The good news for advisors, however, is that times like these are your best opportunities to show value. Uncertain clients are more willing to listen to advice, but you need to make sure that your messages are both clear and relevant to the individual needs of your clients.

Since data aggregation and analysis are my specialties, I’ve thought of several ways that you can use the client data you already have to help craft the right messaging to keep your clients focused and on track during these volatile times, and maybe, pick up a little more business for your practice while you’re at it.

Reutilize Your Client’s Complete Balance Sheet

Withdrawing money from the markets is a classic fearful response to poor returns; however, the average investor moves to cash after the damage is done to their portfolio, and they miss the benefits when the market corrects upwards again. Show your clients their entire net worth, calling out their home equity, their savings and checking accounts, and the cash portion of their investment accounts (not forgetting to pull out the cash component of mutual funds and ETFs, which can be found many places online and in the products’ offering documents).

Your clients will be shocked to see how large their cash allocation truly is, if they view their entire asset base. Even conservative investors realize that they don’t want 100 percent of their assets in cash, so down-market periods are a great time to remind clients that their “life allocation” is generally much more conservative than they may believe. And, when the dust settles and the markets start to go up again, this balance sheet exercise gives you some insight into where there are other pockets of cash that the client should probably have invested (with you!).

Dust Off Old Client Statements from 2009

Your client may have thrown out their old statements, but advisors with long-standing client relationships might want to blow the dust off reports from 2009. People have short memories, and it wasn’t that long ago when your clients were asking you how to take advantage of the incredible stock market returns that came after the downturn of 2008 (greater than 50 percent returns in the 12 months following the low).

Volatility breeds opportunity, and investors who hunker down and stay the course end up profiting, while investors who move in and out of the market (motivated either by greed or fear) often pay the price. When talking to newer clients, use a service to view their older investment accounts. By compiling their data from the 2009 cycle, you can show them performance insights that they probably didn’t get from their online brokerage or 401(k) administrator. Running performance and risk statistics on investors who have stayed invested since before 2008 shows a compelling story.

Run Client Balance Sheets Through Monte Carlo Simulation

Getting clients to focus on long-term goals is always difficult, but the message is clearer when it’s delivered with real, live data. Gather data from all your clients’ accounts into a simple Monte Carlo engine (available through multiple planning tools and even in free online widgets) and show clients what their most likely long-term scenarios look like, across the certainty spectrum. Whether you’re working with high-net-worth clients focused on preserving estate value or less affluent clients working towards a healthy retirement, these simple scenario outputs show how inconsequential a temporary dip can be in the long term. Rerun scenarios with different allocation mixes to show that moving aggressively to cash, however, can be damaging to likely terminal values (by affecting the future portfolio returns). Focusing on the long term can help align clients with what really matters to them (and reminds them why they’re working with you in the first place).

Obviously, every advisor-client relationship is different. However, across the board, we believe that stronger, more successful relationships come when advisors are able to deliver specific, numerical and data-driven insights to clients. Changing perspective from the markets at large to clients’ personal statistics and data can help steady emotions and enhance your practice.


Lowell Putnam is the Co-founder and CEO of Quovo, a financial data science company for the wealth management industry.