When the stock market nosedives, people may become anxious as well as open to exploring more stable assets. With insurance, for example, you can use words like “guaranteed” and “lifetime income” in your conversations. Although, what do you tell clients who are worried about their stock portfolio?
Years ago, insurance agents sold insurance, stockbrokers sold stock, and so forth. Everyone stuck to their primary line of business. Now offering wealth management can be part of your value proposition as a financial advisor. So now when the stock market plummets and your client panics, they contact you. Here’s what you can do to reassure them, build trust and deepen your relationship with clients.
- Call them first. Calling your client reminds them you know they own stock and are anxious and concerned. Your clients are your first priority. They want to know they are top of mind and you care about them.
- Listen before speaking. As a Type A personality, you may want to immediately say, “I have this under control.” Of course you don’t have it under control! You don’t even know if the client is concerned or what they are concerned about. Let them speak first.
- Can you address their concerns? Do they think this is the end of the world? Do they think the stock market indexes will go down to zero? Do they think their ATM card will get rejected the next time they use it? Try to put things into perspective.
- Are all their assets in one place? You hope they’re not 100% invested in stocks. They may own insurance products, own their home, have cash in the bank or maybe they own gold. This is not the end of the world.
- If the stock market is down, say 10%, that doesn’t mean their portfolio is down 10%. The stock market indexes are 100% equities. Thanks to asset allocation, your client likely has a balance between stocks, bonds and cash. How much has their portfolio moved? It’s likely less than the headline numbers on the news.
- What do your analysts say? Your client does not think you have a doctorate in economics or wrote a thesis on stock market volatility. They know the fees they pay your firm contribute toward the salaries of analysts who have those credentials. What advice are your analysts giving?
- Should you look to the past? When you passed your licensing exams, you heard, “Past performance is no guarantee of future results.” You have also heard, “History repeats itself,” and “Those who do not learn from the past are doomed to repeat it.” Markets and the economy move in cycles. Interest rates often move in cycles. What can history teach us?
- They are long-term investors. The big goal on their horizon is likely retirement. How far away is that day? The question is not what the stock market will do this week, but where your investments will be in the year they are retiring. They would be leaving the money alone anyway.
- You should offer advice. This isn’t the moment to ask, “So, what do you want to do?” Instead, calm your clients by being proactive. Based on their long-term time horizon and the advice from your analysts, what are the next steps they should be taking? They will remember you offered proactive advice.
- When will you talk again? You don’t want to leave them with a one-and-done feeling. What if the stock market heads down for a month or two? Remember monthly statements come out in the first few days of the new month. This might be a great time to talk, especially if they have worked themselves into an anxious state.
Now is the time to build trust with clients by showing compassion and empathy and letting clients know that it’s all about them.
Bryce Sanders is president of Perceptive Business Solutions Inc. His book, “Captivating the Wealthy Investor,” is available on Amazon.
For more client communication ideas in volatile markets, read
