Clients require varying degrees of handholding during stressful periods. And, because global markets are more interconnected than ever, financial advisors must be prepared to handle clients’ reactions to various market disruptions.
“We’re much more exposed to global volatility than [in the past],” says Kim Thompson, senior vice president of advisory services at Credential in Vancouver. “The advisor’s role is to reinforce that every market, every investment is going to have its down days.”
Although that main message hasn’t changed, the conversations you have with your clients have to evolve to help them handle the issues they may face, Thompson says.
Whether your clients are eternal optimists or stubborn pessimists, here are some tips you can use to help them stay the course in the face of uncertainty:
> Dig deeper
Go beyond the surface-level issues of how clients feel about their portfolio performance. You have to broach any underlying anxieties they may have, Thompson says.
For example, baby boomers — particularly those at the tail end of the cohort — have to contend with vastly different challenges than previous generations did. With people living longer and parents supporting children well into adulthood, these clients’ early retirement years may be spent covering the expenses of their aging parents and their grown children.
So, instead of exploring only their ideal retirement picture, Thompson says, ask them about the factors that could complicate that vision, such as whether their children are self-sustaining adults or if they expect to help their elderly parents with their medical expenses.
“They may not even be cognizant of what they’re going to be facing,” Thompson says.
> Account for sensitive issues
Be attuned to each individual client’s fears, anxieties and frustrations, and contact them when they are in need of reassurance.
There is more to your role than providing financial advice. “Being a highly valued advisor is as much about knowing how to personally connect with people and understanding where their sensitivities lie,” Thompson says. “Don’t paint them all with the same brush.”
For example, after an announcement about a change in tax policy, draft a list of clients who may be affected by that change. Contact these clients and assure them that you have it covered. Be prepared to field any questions or concerns they might have.
> Empower them with information
Help your clients to understand financial issues and prepare for challenges by providing them with information that is relevant to their goals, Thompson says. Many firms are launching online portals or setting up social media accounts to give clients access to a wide range of resources.
The more knowledgeable your clients are about the financial issues that affect them, the more productive your conversations with them will be. For example, by periodically sending articles about retirement, you help clients remain up to date on demographic trends and focused on their retirement goals.
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