The Whiteboard: how should advisors communicate with ‘Nervous Nellies’ during market sell-offs?
Over the past week we have experienced the largest increase in market volatility since the financial crisis. As much as we might know that this is likely only to have short-term impact, our clients need to constantly be reminded of that. Frankly, who can blame them? They weren’t trained for this like you were and it’s their life savings on the line. So, are you prepared to be there for them? Even better, are you proactive in your communication so that you can anticipate their anxiety and alleviate it?
In this column I have previously spoken about the importance of client segmentation, but I didn’t get into the categories that we segment into. One of these segments is for our “Nervous Nellies” which I say with the utmost respect. I am very open with all clients, but this segment especially about the fact that it is OK to be nervous about investing. Our job is to understand where their stress thresholds are and to try to alleviate that stress. By segmenting our clients into categories where we can easily and efficiently target a particular behaviour type, we can now target messages to them at just the right time, say after a 10% market correction over four days.
The first action we take is to get out a quick market update which also includes our general advice on remaining disciplined. If we have constructed our portfolios and our financial plans properly then there is no reason to be worried and we are there to answer any questions that may come up. I think it’s always important to also point out that we always know that a market downturn could be right around the corner and we have prepared for this. Additionally, we let our clients know that this is when the best investors in the world go hunting for opportunities and so we are actively searching for good valuations on high-quality assets. Not only will this initial communication put your client’s minds at ease, but it could save you lot of time from phone calls and individual emails you would have had to respond to.
Now, speaking of phone calls, nothing beats the personal call that some of your clients may need and so it’s important to pick up the phone and make a few direct calls to some of those clients who you know may be a little more nervous than others, if nothing else to simply get a gauge on their temperature. Treat it like market research as you look to find out how your broader client base might be feeling. It’s easy to be numb to the market news as experts because we naturally are not stressing out as much about it. Great companies put themselves in their client’s shoes on a regular basis.
So, now that you have navigated through this bad week, how about next month when they see their statements and their investments are off 5% from the previous statement? Most statements come out around mid-month and so at Endeavour Wealth Management what we do is diarize a follow-up communication which clients will receive around the 10th of the month or within a week of them receiving their statement. We know that certain clients blood pressure is going to increase when they see that statement and we want to get in front of that so that not only can we alleviate their stress, but also remind them that we are aware of what has happened and we are on top of it. Clients are never happy about market selloffs, but they hired you to navigate through them, not to prevent them.
As we know, market selloffs are not all about protection. They are about opportunity as well and as business owners we need to be concerned about growth as well. These are the times that you want to up your resources into your prospecting efforts and take advantage. I would wage to gather that at least 8 out of 10 advisors are not actively communicating with their clients and there are still so many who bury their heads in the sand instead of being there for their clients. If you are actively growing, now is the time to remind your prospects that you are there for them when their advisor isn’t. Over the next month, that prospective client is going to be evaluating what they are paying for and the value they are receiving. If they decide that they are not receiving fair value, then you want to be the first name they think about. Get on the phone, write letters and get out to events. If you’re not the one doing it, I can assure you that an Endeavour Wealth Management Advisor is.
As always, if you would like to hear more about our processes and systems please reach out. Endeavour Wealth Management is always open to sharing and helping advisors who want to elevate their service offering to their clients.
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.