We’re living through tumultuous times. A pandemic that’s barely in the rear-view mirror, the pain of rising interest rates, necessary and unnecessary price increases, raises that haven’t come close to meeting or exceeding inflation and a market environment that’s as bad as anyone’s seen in 15 years. It’s been a rough ride for even the most experienced financial advisors, and it’s not hard to imagine how clients have felt—in fact, you probably don’t have to imagine it at all.
Most of us are familiar with 3 a.m. panic emails written by clients whose fiscal anxiety has turned into full-blown insomnia. It’s hard to blame them. Millions of adults are living through market turmoil for the first time, and it’s hard not to panic when you see your retirement portfolio shrink.
The question is: What can we do about it?
Proactive and Reactive Planning
There are almost as many ways to address big feelings as there are people who have them. You won’t find one solution that fits everyone, but there are certain ways to approach the situation that can help mitigate the effects of economic turmoil on your clients.
Before the Panic
Part of the reason clients panic is because they suddenly find themselves in unknown territory. They probably don’t watch the markets, stay up to date on economic indicators and earnings reports or stare at charts the way you do. In fact, many people are content to ignore the markets entirely until something goes either very right or very wrong.
Humans tend to fear the unknown. Your clients get scared when the market takes a dive, right? Part of that is a fear that they’ll lose all their money, see a delay in retirement or have to downgrade their lifestyle. The other part of that fear is that they don’t know if they’ll lose their money or have to change their plans. It’s unsettling to feel adrift in unfamiliar seas.
You can’t control the economy, but you can show your clients that you have a plan for contingencies like major downturns or long-term chop. Make a point of explaining what you’ll do with your clients’ portfolios if something goes wrong. Let them know that it may be a couple of years before things normalize. That little bit of certainty can help them feel like they’re standing on solid ground.
If you see storm clouds on the horizon and haven’t yet heard from your clients, you may want to consider reaching out to explain the potential risks facing the economy and, by extension, their portfolios. Invite them to call you or set up appointments to talk it over and strategize their next moves. Walk them through timelines, show them historical charts, and assure them that you’ll be there for them every step of the way.
During the Panic
If sharing your plan doesn’t assuage concerns—or if it’s too late for preventative measures—take off your financial advisor cap and put on your unlicensed therapist tweed. Clients who are feeling scared or full-on panicking don’t need you to tell them that their portfolios will regain their value eventually or that they should just take a breath and calm down. They don’t need your expertise; they need you.
Much has been written about the subject of dealing with emotional clients. Take this piece from Investor’s Business Daily about advising during the pandemic, for instance. The authors suggest strategies like acknowledging the source of the client’s unhappiness, conveying authentic concern without being too pushy, not just assuring clients that they’ll bounce right back and using smart questions to lead clients toward positive mindsets.
Listen
There are plenty of tips for handling emotional clients, but the most important is just one word: Listen. Your clients want to be heard, and they want to know that you hear them. Don’t try to head off their concerns with solutions. Just wait, listen, and ask questions that help them open up. And try to prevent panic in the first place if you can. An ounce of prevention is worth a pound of cure.
Matt Reiner is CEO and co-founder of Benjamin; Partner at Wela Strategies LLC and Capital Investment Advisors.
