Seven strategies to get clients to act

Is doing nothing really the best move? Advisor provides tips on getting people to take action in this downturn

Seven strategies to get clients to act
Bryce Sanders

When markets fall, is sitting around and doing nothing the best strategy? We all know ‘past performance is no guarantee of future results’ but we also know markets tend to move in cycles. If you are an experienced advisor, as you watch the market action, you sometimes get the feeling you’ve seen this movie before. Although you can’t accurately predict the ending, you want to encourage your client to take action. How do you do it?

Start by realizing it’s their money. They make the final decision. You can advise, because that’s what advisors do. Ideally you want them to consider taking action that doesn’t take them too far from their comfort zone. Remember Indiana Jones and The Last Crusade? The stepping off the cliff edge scene? You’ve got to throw the sand, so that the glass bridge becomes apparent.

Let’s look at seven strategies you might consider:

1, Commit a little bit now, a little bit later. It’s the dollar-cost-averaging story. If the market rises, you got in when pieces were cheap. If it falls, you average down the cost basis with future purchases. 

Logic:  We’ve all heard Wall Street is the only place that when things go on sale, people don’t buy.

2, Dividend-paying stocks. Pick some companies with long histories and a track record of paying and increasing dividends over time. Their years in business indicates they’ve weathered difficult times before. Your firm’s research should indicate if the dividend is secure. 

Logic: Get paid while you are waiting.

3, Defensive stocks. Some companies are considered better at holding up in a difficult economy than others. They often produce things people buy in good times and bad. Utilities, consumer products, food, health care and beverage stocks are traditional examples. They are often established companies paying dividends. 

Logic: Your client still intends to visit the grocery, buy food and toiletries, fill prescriptions and turn the lights on at home.

4, What’s the best stock you ever owned? Investors often have love affairs with stocks. If the firm downgraded their opinion and you suggested selling, they turn you down flat. They tell the story of how it’s held up great before and the management is terrific. They’ve either held it forever or traded in and out over the years. Ask them how it’s doing now. Should they be adding to their position?  (This assumes it’s not a concentrated position.)

Logic:  They often sell themselves on the idea.

5, Sectors doing well. The market might be down, but that’s not the whole picture. The S&P 500 Index is made of 11 sectors. Each are made of several industries. Which sectors are doing better than the overall index? Why? Which industries in the sector are doing well? 

Logic: Even in difficult markets, money sloshes around. It goes somewhere.

6, Lessons learned over time. OK, we’ve heard the four most dangerous words on Wall Street are: “This time it’s different.” Your client feels it really is different this time. Assuming your relationship has been long term, remind them about a previous decline. Ask if there was anything, in hindsight, they wished they had done differently back then. Listen to their answer. 

Logic:  Let them think about it.

7, What do you need to see? Your client is scared. They have good reason. What’s the light at the end of the tunnel? Can they put it into words? What do they think professional investors on Wall Street are looking to see?  Is it strong company earnings? Is it another cut in interest rates? Is it a high number of coronavirus recoveries being announced on the TV news? China’s factories humming again? Build that list. How many do they need to see at once? All? Three out of five? 

Logic:  Now you have something to keep in touch about.

Investing shouldn’t be a struggle. It should involve your client following advice that allows them to feel they are taking action while staying in their comfort zone.


Bryce Sanders is president of Perceptive Business Solutions Inc.  He provides HNW client acquisition training for the financial services industry.  His book, “Captivating the Wealthy Investor” can be found on Amazon.