Dealing With Quirky Markets And Nervous Clients

August 31, 2015

by Beverly Flaxington

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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Dear Bev,

Unsettled markets are creating unsettled clients. We are being proactive, but I wonder whether being proactive tells clients that there is a problem. We can’t say, “There is nothing to worry about” without creating a concern that there IS in fact something to worry about. Watching every day is not consistent with our long-term view. If clients are invested for the long term, it doesn’t really matter, but it’s all we talk about lately. All of our other projects and plans fall to the wayside while we hand-hold people who are nervous and upset.

Kevin R.

Dear Kevin,

The world we live in is complicating things for financial advisors. It’s easy to focus on how “quirky” the markets have been and to worry about the impact on our investments. The news, on every front, conveys the dire circumstances, and we realize how tied our livelihood is to happenings throughout the world.

That said, the best defense is a good offense. Waiting for nervous clients to call you could be dangerous because it puts you in explaining mode instead of calming mode. You want to take a position on what’s happening. Do you believe this is a short term “blip” or a longer term adjustment? How does your investment process allocate for situations such as the current market we are experiencing? What’s your view on the next few months or years? It’s important to have a position and to communicate that position to your clients as proactively as possible. Some clients may need more communication than others, and hopefully you know which clients that will be at this point. For example, if you know you have particularly nervous clients who need to be soothed, you may want to make a phone call to see how they are faring.

I’ve received a number of emails from advisor clients of mine this week, and I like to read about their perspective on the market, what they think will happen next and what they are doing to deal with the changes. It shows that they are paying attention and that they have a position to take. It’s always better to be proactive and to convey a viewpoint than to be on the defensive and to try to explain what you are doing in reaction to what’s happening.

Some advisors report that they are happy that these quirky markets are in play. After all, when the markets are up, up, up, almost anyone can look good in this business. Now is the time to separate your firm and your approach, and to let your clients know that you (a) have a perspective, (b) are implementing it and © are monitoring what’s happening and the impact on their portfolios.

You can’t avoid the down markets — what goes up must come down from time to time — but you can actually use these fearful and erratic times to your advantage. Show that you have a long-term view, that you are watching what’s happening and that you’re being careful about the choices you make.

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Dealing With Quirky Markets And Nervous Clients