Even clients with the means to do so may hesitate to invest, as the news cycle and market’s ups and downs may leave some clients feeling like they should change established financial behaviors due to the volatile economic landscape…Knowing this, how do advisors talk to their clients about their concerns?
If it seems like watching the market’s upswings and downturns feels like being on a roller coaster, you’re not alone; the pandemic, stimulus plans, the presidential election, and more have all had drastic effects on the economy, and the differences between the stock market’s performance and day-to-day life on the ground are stark. Talking to clients about the current investment landscape can therefore be a tricky undertaking; with so much uncertainty, how can advisors best counsel investors looking to capitalize upon the many new opportunities that have arisen, while navigating around the equally as numerous economic pitfalls?
After 2020’s record-breaking layoffs and unemployment numbers, emergency savings and rainy-day accounts are even more important than usual— particularly so for clients with little capital who are beginning their investment journey. However, even clients with the means to do so may hesitate to invest, as the news cycle and market’s ups and downs may leave some clients feeling like they should change established financial behaviors due to the volatile economic landscape. "Even those that are in a good position right now are worried this could change at a moment's notice,” says Lauryn Williams, founder of Worth Winning and financial planner in an interview with Business Insider, where she noted that clients are less willing to pay off debt or invest more heavily despite having the capital to do so.[1] Knowing this, how do advisors talk to their clients about their concerns?
Seasoned advisors know that these sort of “once in a lifetime” socioeconomic events actually happen fairly frequently. Investors may need reassurances that this too will pass, and advisors can note that instead of waiting for the market to dictate investor behavior, with help they can position themselves to come out ahead long-term. Preemptively reaching out can help advisors get a feel for their clients’ emotional state, their specific and individual concerns, and offer an opportunity to remind them that despite the economic and societal roller coaster ride that was 2020, advisors are there to help them navigate these difficult waters and come out ahead in a way that is in line with their comfort levels. Now is the time to build relationships and trust (without being pushy!), because investors need reputable advice more than ever.
Communication is key, but it’s important to remember that the holiday season is a stressful time of year at the best of times so it’s on advisors to work the follow through and be flexible.
While the whole world was thrilled to leave 2020, as we’ve seen, nothing inherently changes once the clock struck midnight on New Year’s. However, now’s the time to be making resolutions (financial and otherwise) so it’s a great time for advisors to check in on their clients’ priorities and goals, some of which may have shifted, and adjust their approach when necessary. With such rapid changes and the news cycle introducing fresh headaches on what seems like a daily basis, clients may need more help than usual understanding and interpreting market trends and how to respond (or, more importantly, how to anticipate them). Communication flexibility is also an asset—advisors able to adapt to client needs will be at a significant advantage of those who stick to a rigid method of interaction. Some clients may have zoom fatigue from constantly video chatting family, friends, and colleagues at work, and may prefer being able to read and write emails at their leisure; others might instead highly value such personalized attention and, frankly, human interaction.
Even if it doesn’t feel like it sometimes, the role of advisors play in their clients’ lives is incredibly significant. According to a recent Gallup poll, “35% of investors with financial advisers are ‘very confident’ they have the best possible investment strategy” compared with 15% of investors without an advisor.[2] Equally as meaningful are the numbers of investors who say they’re “not too confident” or “not confident at all”— 30% of those without advisors, but only 15% with advisors. With clear communication, personalized attention, and patient guidance, advisors can ensure that their clients fall within that 35%.
[2] https://news.gallup.com/poll/323468/investors-advisers-confident-amid-covid.aspx
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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