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No one is going to forget the events of last Thursday and Friday anytime soon. Accountants might be in the final days of getting April 15th tax returns done, but any financial professional connected with investing has a client base whose emotions range from startled to terrified. Every one of them should get a phone call or some form of individual personal outreach.
In my opinion, every financial advisor will say: “That is what I have been doing. I have been reaching out to all my clients.” However, most financial advisors have a few “scary clients” who do not take bad news well. I often think there must be some advisor somewhere who built a stock portfolio for a new client on Tuesday, April 1st and watched the stocks they just bought decline by 10% at the end of the week. No one wants to have that conversation.
Why should you call every client?
1. Let them know you are paying attention. Reaching out lets them know you are aware of what is going on and you know they are concerned. Some clients might say: “I know investing involves risk.” They should still be glad you called. Others might be frantic. This is an opportunity to put things into perspective.
2. Don’t wait for them to call. Some people feel you should let sleeping dogs lie. Don’t go looking for trouble. Others think client’s are on top of the financial news and are OK with it, otherwise they would have called. Here are two reasons to be the first to reach out: If you wait for them to call, they might be calling because they are really upset and assume you are not paying attention. The second reason is an advisor working at a competitor will ask them, “When was the last time you heard from your advisor?”
3. Some people might be getting good news. Many years ago I had a client who called and said: “I am concerned about the stock market.” I thought for a moment, checked his portfolio and said: “I don’t know why, (name). You don’t own any stock.” Our investing relationship was based entirely on fixed income. Even if they are not directly affected, they should still hear from you.
4. Give them the credit. Let us assume the client took your advice concerning keeping their asset allocation in balance with the model portfolio aligned to their risk profile. From time to time they had been pulling money out of equities as the stock market set new highs. They realized profits. Give them the credit for agreeing with your recommendations.
5. Offer advice. You want to establish a reason for your call. It isn’t simply to say hello. What is your firm saying? What are they recommending? Has the recommended asset allocation model changed? If not, this is a good time to make the case for buying quality stocks when they are on sale.
6. Beware of catchy platitudes. Clients are attached to their money. They feel these losses, even if they are only on paper. (until they close out the their position.) They might not want to consider buying on weakness, citing the expression “Never try to catch a falling knife.” When the stock market eventually turns around, it will be because someone was buying. You might try to catch a falling knife if you wore a Kevlar glove, like fishermen use when cleaning their catch. You might deal with a falling knife if you had a powerful electromagnet that stopped the knife’s downward motion and attracted it to the magnet. The point is, someone will be buying.
7. What is your client’s favorite stock? People who trade stocks often have a favorite. They might have held it for a long time and their cost basis is very low. They might consider it a favorite because they trade in and out from time to time. How is that stock doing? Are they considering selling? Probably not. They might talk themselves into buying more. Hopefully your firm has a positive research opinion and they do not hold a concentrated position.
Markets are cyclical. They can turn suddenly. Your client will appreciate you taking the initiative and calling. They will also remember if you offered advice. They might or might not have taken your advice, but they will remember you gave it.