Communicating with clients in tough times

Clients seem to be fairly calm about this bout of market volatility, but it's still important for advisers to speak with them directly

Feb 5, 2019 @ 12:27 pm

By Joni Youngwirth

2008 wasn't that long ago. Back then, baby-boomer clients were 44 to 62 years old. Today, they're 55 to 73 years old. And they still make up the majority of most advisers' clients and assets. But even though the demographics and net worth of your client base may be similar, the market gyrations of the past few months haven't engendered the same anxiety among your customers as in 2008.

Eleven years ago, market trauma caused most advisers and clients severe angst. Consequently, you were encouraged to be proactive and contact clients even when you didn't think you needed to do so. Remember all those articles and webinars that explained how to soothe clients' woes? Adviser compassion fatigue was commonplace, as you took call after call from clients worried about their diminishing nest eggs.

Why hasn't there been the same level of buzz among clients as there was years ago? After all, those baby-boomer clients are closer to or already in retirement. They're making critical decisions about their finances and drawing down their assets now. Why do they seem to be taking market volatility in late 2018 and early 2019 in their stride? Let's consider some possible reasons for this attitude change.

What's going on

Did clients get smarter? Have clients truly learned that markets go up and markets go down? Have they learned that they gain nothing by panicking or by knee-jerk selling and buying?

Is it too soon to get anxious? We've been in the current period of volatility for four or five months. Is it too soon for clients to feel the pain? Or have advisers been assuaging clients' concerns and keeping them calm before anxiety sets in?

Is it different this time? Yes, but in a good way. Many analysts believe that economic fundamentals are strong enough to weather the volatility. Do clients hear that theme coming through in the media?

Have advisers made a shift? Chatter about the industry trend of moving from investment adviser to financial planner has been all the talk for years. Could the current calm be due to advisers having heeded the warnings? Perhaps they've decided that chasing performance is only as reliable as the last bull market. Has this shift led to clients' understanding that daily market performance may cause their portfolios to increase or decrease in value but that goals and objectives can still be met?

Has the industry shifted? As noted above, for years industry publications and gurus have talked about the investment-adviser-to-financial-planner trend. Maybe the move has occurred. Granted, some advisers have embraced a planning orientation from the get-go, but many still make a living by promoting their ability to outperform the market. And even though few new advisers have been entering our industry, perhaps many who have entered have been adopting a financial planning approach and encouraging clients to sit tight for now.

In 2019, it's still important to be proactive

No matter why clients remain relatively calm, it's still early. Market volatility may be with us for quite a while, so the same best practices you learned in 2008 about communicating with clients need to be implemented today.

Certainly posts, tweets, newsletters and so forth are important and can be effective. But it's better to pick up the phone and speak with clients directly to ensure that they know what you know — that their portfolios can weather a storm. Invite clients in for a review if that's what they need to feel supported. Some clients may be timid. Give them the option to feel secure.

Of course, you should also use posts, tweets and newsletters. But be sure that they reinforce — not replace — the themes you share individually with clients. No matter how often you tell clients market fluctuations are normal, people need reinforcement to stay the course.

And keep in mind that volatility is stressful for advisers, too. You don't control the markets, but they affect everything you do with clients. Don't forget to practice extreme self-care, however you define it.

To sum things up, remember that even if your phone isn't ringing off the hook, your clients do need you now.

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.

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