What Are Clients Worried About?

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Clients have historically seen obstacles to investing.  There’s always unknowns on the horizon.  It’s been said: “The market climbs a wall od worry” yet few investors will see that logic as a reason to forge ahead.  As their financial advisor you need to acknowledge their fears, respect them and make the case for moving ahead.

Remember “Feel, Felt, Found.”

Here’s a sales approach that’s been around forever.  You understand how they feel.  You came across another person who felt the same way.  They found (what you are suggesting) addressed the problem or gave them confidence to move forward.

Sales should be a collaborative problem solving process, not an adversarial relationship where you plow through objections like Conan the Barbarian in battle.

Ten Client Concerns Keeping Them From Taking Action

It’s been said the four most dangerous words on Wall Street are “This time it’s different.”  However, each of these problems sounds extremely serious.

  1.   The coronavirus pandemic.  Is it the end of the world as we know it?  Will we never celebrate holidays together, gather in bars or have first dates with strangers?  Even when the problem seems unsurmountable, people find a way of adapting.  Life goes on.  One of our favorite restaurants in the William Penn Inn in Gwynedd, PA.  Established 1714.  In business 300+ years.  This would have included the Smallpox pandemic (1877) and the Spanish Flu pandemic (1917).  They adapted and recovered.
  2. The upcoming election.  People are polarized.  We act as if this hasn’t happened before.  It’s happened plenty of times.  Clinton, Obama and Bush each had their fans and detractors.  Life went on after the elections.  There are plenty of statistics you can show on post election stock market performance. Here’s data from Forbes. (1)
  3. The economy is uncertain.  When has the economy ever been certain?  The only “sure thing” seems to be when a weekly news magazine runs a cover story “The Unstoppable Bull Market” you think it’s too good to be true.  There are charts showing how the market has fared amid world crises over the past 100 years or so.  Here’s an example. (2)
  4. Climate change is a problem.  You are right.  Would it sink the stock market near term?  Probably not.  Consider the question from another point of view: Out of crisis comes opportunity.  At the start of the pandemic, PPE face masks were in short supply.  Now you can buy them everywhere, at higher prices than before the pandemic.  The luxury good firm Louis Vuitton is introducing a face shield.  Sources say the cost will be $900+. (3)  There will be businesses that see opportunity in addressing climate change.
  5. Taxes will be going up.  Your client’s logic is the government is spending so much supporting the economy during the pandemic that taxes will need to rise.  There are many types of taxes.  Income tax.  Corporate tax.  Sales tax.  Estate tax.  Capital gains tax.  When the government needs get money, it doesn’t necessarily mean your client will be footing the entire bill personally.  Think about current taxes.  The stock market has been going up for several years.  When clients lock in gains, the government expects it’s share in capital gains taxes.  It’s good to be a government.
  6. World unrest.  Years ago, I talked to a client about the benefits of international investing.  He said:  “Haven’t you heard?  They are having problems ‘over there.”  Apparently everything beyond our shores is “over there.”  According to a 2006 New York Times article, over 3,400 years the world has been at peace for only 268 years.  (4)   There is always something going on somewhere.
  7. The stock market is too high.  This might mean another visit to the “mountain chart” (2).  It’s a concern, but you can dig deeper based on people’s beliefs.  The stock market has historically been driven by company earnings.  Do they feel US companies will stop making money?  The consumer (who often represents about 66% of GDP) will stop spending?  Probably not.  They likely have a favorite stock.  If you said “Since you feel so strongly that the market is too high, do you want to sell it?”  They will likely say: “Of course not.  They’ve done great for years.  I have faith in them.”
  8. Interest rates are so low.  It appears they will stay low for a while.  This is good for businesses that want to grow, bad for retirees on a fixed income seeking to earn interest.  You might talk about total return, stocks paying dividends with the added potential for growth.  You might seek out companies with a history of raising their dividends.  These investors need to understand they are taking on more risk.
  9. Dollar weakness.  Currencies are often a source of national pride.  Citizens equate a strong country with a strong currency.  Put another way, think of the weakness in the Argentine or Mexican peso when those countries has problems.  Clients feel dollar weakness when they travel abroad, but no one is doing that right now.  A weaker dollar makes American good more competitive when sold abroad.  It also helps companies earning profits in foreign currencies when translating back into dollars.  
  10. Fear of losing money.  Overall, clients are worried about making the wrong choice.  Buying at the tippy top.  No one can accurately predict the future.  Clients can dollar cost average, buying a bit at a time on a monthly schedule.  If the market rises, some of their money was invested at lower prices.  If the market falls, they average down their cost.  You need to find the amount they are willing to invest that is meaningful, yet doesn’t take them outside their comfort zone.

Clients and prospects have concerns.  You need to understand and relate to them.  You also need to be able to make the case why they should take action to some degree.

Related: Free Advice is Biased Advice

  1.  https://www.forbes.com/sites/kristinmckenna/2020/08/18/heres-how-the-stock-market-has-performed-before-during-and-after-presidential-elections/#1f75d8f74f86
  2. https://virtueofselfishinvesting.s3.amazonaws.com/uploads/reports/2017/4675/history_of_market_corrections2-hires.png?link=mktw
  3. https://www.forbes.com/sites/rachelsandler/2020/09/12/louis-vuitton-will-sell-luxury-face-shields/#72fe72f423a0
  4. https://www.nytimes.com/2003/07/06/books/chapters/what-every-person-should-know-about-war.html#:~:text=Has%20the%20world%20ever%20been,wars%20in%20the%20twentieth%20century.