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When the market declines your clients will no doubt be aware of the simultaneous fall in the value of their portfolios . And they will be concerned. Human nature dictates this. That’s why when the time comes, it’s crucial that you are prepared to counter their insecurity with reassurance. You must be ready to instill them with confidence that their investments are secure.
If you run and hide when the markets tumble (like a surprising number of advisors do), your clients’ fears will multiply. As a consequence, they could end up making a bad decision about their investments – or about working with you.
So, make sure you’re ready to step into the breach by having your presentation ready to hand. Here are four reasons why you should prepare that presentation right away.
If you need help reminding clients that even though the world is constantly changing, the reasons for investing stay the same, get Don’s CD, Simple Truths for Investors . This CD could make a great gift for a client – just be sure to get approval from your Compliance Department before sending to clients.
#1. You’ll be able to allay clients’ fears about their investments and without delay
You know how the stock market works, but your clients may not. They may not understand that the market is by nature volatile. It’s down to you to reassure them that the market will rise in the longer term so they should persevere with their investment plan.
In your presentation you need to explain the nature of volatility – analogies are useful here. For example, ask clients “When you drive to visit friends – do you turn back when you run into the inevitable construction? Of course, you don’t – you wait until the traffic starts moving again and carry on.” “Long term investing is the same – there will be glitches and dips along the way, but if you’re patient you will eventually get safely to your chosen destination”.
It’s your job to get across the importance of long-term investing in a calm and confident manner. This is best achieved by planning and practicing your conversation ahead of time.
#2. You’ll instil your clients with confidence about you
If you disappear when the times get tough, clients will lose confidence in you. Poor communication is the number one reason clients fire their advisors , so you need to be prepared to talk to your clients whatever the market conditions. By preparing and practicing your presentation in advance you’ll be better able to come across as trustworthy. They will feel confident that you’re giving them the right information.
If you leave your presentation to the last minute, clients may sense doubt and they will channel this fourfold. If clients feel you’re not demonstrating leadership skills, they will look around for another advisor to trust with their investments.
When the news is bad always ensure you call before your clients call you – so they know you’re on top of the situation and are guarding their investments wisely. Always be proactive , not reactive.
#3. You’ll be doing what most advisors don’t do
If you prepare your bear market presentation in advance when the market is still high, you’ll be doing something most advisors don’t do.
Many advisors avoid the conversation at all costs – usually because they don’t know what to say. Or because they haven’t thought things through and haven’t considered how their clients may be feeling.
So, you’ll be head and shoulders above the competition if you’re ready and prepared to have that conversation.
If you need help discussing this huge client concern – market volatility – and guide your clients closer to the fulfilment of their financial goals, get the mp3 compilation, Helping Clients Understand Market Volatility . It will provide you with talking points and word pictures to help you explain this often times frightening and confusing investment phenomenon.
Related: 3 Effective Ways to Get Clients to Stick to the Plan
#4. You’ll be safeguarding your clients’ futures
If you fail to step in quickly when clients are at their most vulnerable, you are doing them a disservice.
If, left to their own devices they decide to abandon the plan, they could end up facing an uncertain financial future . You need to know exactly what you will say in the event the market tumbles – to secure your clients their comfortable retirement. If you don’t – the consequences are on you.
Ensuring clients stick to the plan no matter what the market conditions is one of the most important parts of your job . So, make sure you know in advance exactly what you’ll say when the markets take a tumble. That way you can step in and allay your clients’ doubts and fears. Be ready to make the first move and give them your take on the situation.
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