Advisor outlines three changes he made after 2008-09 and explains how they are helping guide clients through COVID-19 crisis
During times of extreme market volatility like we are experiencing today, I consider myself to have been very lucky to have gone through the 2008 financial crisis. Being in the industry throughout those events has taught me a lot of patience and has given me a frame of reference to compare other market events. There is no doubt that the velocity of movement in the market has certainly picked up because of several things, including speed of information, social media, smart phones and even ETFs.
The elements of human behavior which drive market movements in the short term remain consistent, which presents an opportunity for advisors to be professional guides for our clients as we navigate through the turmoil.
Some things are different for me this time around. In large part I would say that clients who have worked with me for longer periods of time seem to be better prepared, calmer and certainly more open to looking for the opportunities that volatility can present. Thinking back to 2008-2009 - and granted, I think the financial crisis was a far scarier time for individuals and families - I remember seeing the fear in clients. The volume of incoming calls and emails was certainly higher, and the amount of poor decisions being made by clients with their money was a symptom of that panic despite my advice to be patient. So, what has changed? Well, frankly, a lot!
The financial crisis was one of the best training grounds that any advisor could have experienced. From that event we learned that we needed to have better processes around client communications, and we needed to implement new technology in order to improve efficiencies so that we could connect to clients on wider scale and quickly. Additionally, we recognized that we needed to change the conversation that was being had with clients around where value is truly coming from. While doing this, we also knew that market crashes can be the best time for business acquisition, so we needed to be able to do all of these client communications while still ramping up our business development at the same time. To be better prepared, here are the changes we made:
- Proactive communication – As experienced investors and advisors, we know that these market events don’t last and that incredible investing opportunities should be taken advantage of. It’s one thing for us to know and another for our clients to know that and even if they say it, they may not fully believe it. We need to put ourselves in our client’s shoes regularly and try to understand what they are going through. In times of extreme volatility, proactive communication is paramount. Having an email communication set up with segmented client lists has been instrumental in putting calming communications in client’s hands early and often. Having the technology in place is one thing but putting together content is the next challenge. In our group, we have designated different people to write on a variety of topics including the markets. This helps us to divide the load. This is not always possible if you are an individual advisor on your own but may be another consideration for building a team. Alternatively, there are lots of opinions being shared right now and it wouldn’t be too difficult to even forward a piece that has been produced by a product manufacturer.
- Increase your prospecting activity – If you are having trouble connecting with all of your clients, just imagine all of the other advisors who are going through the same challenges. We all know that market turmoil breads huge opportunity and now is the time to be connecting with as many prospective clients as possible. The same tools that we use for communicating to clients are also being used with our prospects. We want to be the first name they think of when they open their next statement and are less than pleased with the performance they have seen, especially with no contact from their advisor. Social media is also a great opportunity which is still underserved in the industry and a great way to get your name out there, but it needs to be done properly and with process in mind.
- Change the conversation – Too many advisors that I meet think that their value to clients is in being able to effectively predict the market and shield their clients from these events. In some cases, I think it’s an admirable ambition as it’s driven by wanting to protect clients from the stress of these market reactions. Unfortunately, it’s a flawed strategy. In our case, we needed to change the conversation on value to better represent the things we have control over. We have control over asset allocation. More importantly we have control over planning and strategy. Having proper planning in place directs our client’s gaze to longer term goals and helps to alleviate the stress of the short-term market fluctuations.
None of these steps are easy to take and required years of development but the rewards have been evident throughout the last month as our client conversations have been dramatically different. Not only have we received far less in bound communications but the ones we have received have been discussions about investing extra cash that has been sitting on the sidelines. A testament that our training and advice is resonating.
Markets like these are never fun, but the work we do today could pay dividends for the next decade.
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.