Increasing Client Confidence in a Volatile Market

Helping clients navigate through times of uncertainty and market turmoil is one of the most important aspects of being a financial advisor. Without a plan, without a strategy, without a forward-thinking approach, you are bound to lose clients when the next bear market occurs. Advisors who navigated the bear of 2000 to 2002 as a result of the dot.com bubble bursting, and then the financial crisis five years later, have learned more than just a thing or two from those experiences. It’s been ten years since the last bear market, making it critical to focus on increasing your clients’ confidence in your expertise and guidance now.

Here are some actionable steps to take over the next several weeks and months to help you and your clients navigate market volatility ahead.

1. Share the Research

Do not wait until the market tumbles to educate your clients and share valuable research. Enough research has been done to provide a historical perspective on market volatility. 

Schedule a webinar, send out a letter, create a drip email campaign, share a valuable statistic each week via social media, and proactively discuss market volatility during your upcoming client meetings.

We’ve found several resources that are packed with relevant research and insight to help reinforce the following:

• No One Can Predict the Future, Including the Media: Manage Anxiety with a Focus on Planning
  Hartford Funds demonstrates the erroneous predictions of the media in their presentation, Media Replay.
• Capital Markets Have Rewarded Long-Term Investors: Maintain a Long-Term Perspective
  Beyond Investment Illusions, also by Hartford Funds, is a presentation that provides valuable data to illustrate how short-term reactions to the market are detrimental to long-term portfolio success.
• Missing Top Performing Days Can Hurt Your Return: Volatility is Normal, Managing Emotions is Critical to Long-Term Success
  BlackRock has created a compelling presentation, Behavioral Finance in Today’s Market, that helps educate clients on the power of their emotions and subsequent behaviors that can impact long-term success.
• Asset Class Performance Can Not Be Predicted Year to Year: Diversification Works JP Morgan’s Principles for Long-Term Investing helps you to educate your clients on seven time-tested strategies for navigating volatile markets.

2. Have a Message Approved and Ready to Go

Take the time now to draft a letter or create a video that can help calm client concerns on those days when the market drops 600 points or more. Have an email or two in the pipeline, already compliance approved, and ready to go.

Even better than a standard email message, grab your iPhone and do a short video today of what you want to reinforce to clients on those extremely volatile days and have it compliance approved in advance. The video can be sent via email or shared via social media making it accessible by prospects too.

Since most advisors are reactive when it comes to messaging, getting your insight and guidance out ASAP will set you apart from the rest.

3. Ensure Risk Tolerance Aligns and You Have a Down Market Distribution Strategy

The single best way to increase client confidence is to make sure your client’s risk tolerance aligns with the amount of risk in their portfolio. Help your clients visualize the impact of a 15% drop in their portfolio with valuable tools such as Riskalyze or eMoney Advisor. If they are uncomfortable with the what-if scenarios presented, it’s time to make a change to their portfolio.

For clients who are in the distribution phase and rely on their assets for income, it’s imperative to have a strategy you can deploy that enables them to withdraw from conservative assets, rather than equities, for an extended period in a down market. Develop a down market distribution strategy and be sure to communicate when it goes into effect for clients most vulnerable to market volatility.

Preparation, communication, and financial planning are crucial to keeping your clients confident that your guidance is best. For assistance with any of the strategies, resources and tools discussed here, we can help. Our business development consultants can work with you to devise a plan to keep your clients confident and on-course.