The Research On Crisis Counseling For Panicked Clients

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The Research On Crisis Counseling For Panicked Clients

January 26, 2016

by Dan Solin

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

I recently had minor surgery in a doctor’s office. Before injecting me with an anesthetic, the doctor said, “The pain will be very minor.”

I asked, “For you or for me?”

The current market sell-off reminded me of this incident. Advisors want their clients to know that they care about them and are ready to assist by answering their questions and calming their anxiety. Advisors often will say they can “feel the pain” their clients are experiencing – much like my doctor was trying to do with me.

Since this is an important part of maintaining any client relationship, it is prudent to do the research and find the most effective approach.

The admonition that “the road to hell is paved with good intentions” is useful here. In your efforts to allay concern, you need to be confident that you are making the situation better, not worse.

Crisis counseling

Initially, it’s useful to label what you are trying to accomplish. When markets are in a free-fall and clients are panicking, the situation is akin to crisis counseling. What is important here is not the crisis itself (the decline in the market), but rather how your client is responding to this adverse event. In mental health terms, “crisis counseling” is defined as the effort to “help individuals deal with the crisis by offering assistance and support.”

What kind of assistance and support is optimal?

Recognize that there is no “one size fits all” approach. Your clients will have vastly different reactions to a decline in the value of their portfolios. Some will put current market conditions in an appropriate historical perspective and require little assistance from you.

Others will react more acutely, experiencing helplessness, confusion, anxiety, shock, anger and/or panic.

Clearly, your focus should be on the latter group. They are the ones who really need help.

Listen and learn

Communications with your clients won’t be effective unless you have a good grasp of their emotional state. You won’t acquire that knowledge by sending emails and news bulletins. Instead, call your clients and resist the temptation to offer any advice. Ask them questions intended to elicit their feelings. If they are very anxious, ask them to explain their concerns. Don’t offer solutions. Your goal is to learn how they are coping with the market crisis and to be “a source of empathy, acceptance and support.”

You will get there by listening, not by talking.


If (and only if) your client expresses concerns that indicate a lack of understanding about the ebbs and flows of the market, it will be helpful to put the current market decline in perspective. But this can be a trap for the unwary advisor. Be careful not to engage in a long-winded discourse covering decades of market returns. Don’t trivialize their concerns.

Done correctly, this is an opportunity to allay client concerns with some brief, focused examples of how the markets work and the role risk plays in obtaining the equity premium.

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