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Written by: Matthew Jarvis
Fun fact: the winning ticket for last week’s $1.3 billion Powerball lottery was sold in Portland, Oregon. The winning numbers were 22, 27, 44, 52, and 69. The Powerball was 9, and the Power Play was 3X.
Pretty neat, right?
You probably don’t even care—and neither do your clients because knowing last week’s winning ticket numbers doesn’t help anyone win tomorrow’s lottery.
Worrying about what the markets will do next is like looking at yesterday’s ticket numbers—practically worthless because all the data you have today is already outdated.
However, I can see why so many in the industry stress the importance of economic commentaries: you go to industry conferences, you see some big shot with a heap of letters trailing his name take the stage and drone on for an hour about the current economic outlook.
This guy makes guessing what the market will do next sound so important, and his knowledge seems impressive, so you walk away from that meeting with the impression that you should know this stuff, too.
You go home and lose yourself in hours of economic research so that you can present your knowledge to your clients and wow them with your slide deck.
But does this deliver value to your clients? Can you pick a single household whose situation would be improved by your newfound economic aptitude?
Because all the time you spend trying to predict the market boils down to trying to predict the future. Unfortunately, it’s only possible to predict the future if you have a magic crystal ball hidden in your desk drawer.
So, what’s a discerning advisor supposed to do?
Communication matters most
Financial planning has less to do with the technical details of your job and more about your ability to communicate complex things to your client.
Anyone can do a Google search to learn about Roth IRAs and investment models. However, your value comes from your ability to explain these tools to your clients so they will act on your advice.
Clients don’t want a 400-page printout about how the Feds will mess with interest rates seventeen weeks from now. They’d probably benefit more by basing their financial decisions on today’s horoscope because that, at least, will give them an action to take.
Your clients are coming to you because they feel like a ship without a rudder—they are grasping for some semblance of certainty in an uncertain world. You have the opportunity to captain their boat and provide that certainty.
Address their concerns and answer their questions, but always tie your response back to what they can control: their war chest or buckets and their cash flow.
Money and emotions
If you’ve been in the industry for more than three hours, you understand that money is emotional for your clients. You’ve felt the gravity of being entrusted with someone’s entire life savings.
You don’t want to screw this up, which is why you’ve spent an inordinate amount of time analyzing everything so you can be sure you’re making the best decisions for clients.
You’re coming from a good place but going about it incorrectly. Before you start preparing your next economic commentary, I want you to pause and ask yourself:
Is this really helping Bob and Sue?
If you can’t name a client who would benefit directly from your deep dive into economic research, you’d be better off spending your time elsewhere.
Now, this isn’t to say you should be utterly oblivious to what’s happening in the market. If you can’t have an intelligent, informed discussion with your clients about market trends, you’ll destroy their confidence.
You need to find your balance. One way I like to do this is by writing client questions on the left-hand side of my homework sheet during our meetings. Usually, I see a trend in the questions.
If I feel soft in the topics clients ask me about, I’ll focus on learning more about those things during the time I have blocked out on Mondays for professional development.
Translating general economic advice into actionable advice for clients takes a lot of work. Don’t be shy about asking advisors you respect and admire for tips on what to talk about during your next Surge. You’ll gain so much from speaking with advisors who are more successful than you are.
Keep it steady
No matter how cool your investment model is, it’s time on the market, not timing the market that counts. I know that’s an old cliche, but it holds true.
Perhaps our most important job as financial advisors is to prevent clients from making bad financial decisions. They may panic when things go down or get greedy when things go up.
Sometimes, a client will get caught up in what’s happening in the news and fret about the election or what they heard the Fed may do next.
I’ll calmly explain:
Mr. and Mrs. Client,
I can understand this is really scary, and these things are happening. But let’s step back and see how this affects you.
Do you remember the 9/11 Terrorist Attacks?
You know how we all thought the markets would never recover and that the world would never resume normalcy?
And this is not to make light of that horrific terrorist attack. It felt like the world was going to end.
And you had a pretty damn good rationale for thinking that well.
But here we are; the markets are five times higher than they were then.
Remind your clients that they’ve seen the markets behave like this before. Your clients are savvy, intelligent people who made it through down markets before, and they will again.
The best thing you can do with economics is understand behavior management. You should turn to the best communicators, like Stephen Covey and his circles of concern and control, or replay old Zig Ziglar tapes about sales.
Your communication skills will be more valuable to your clients than predicting the yield curve at year seventeen.
Action Items
- Before you study a topic, pick a client and explain how this will specifically impact Bob and Sue or Dave and Sarah.
- If you don’t have an answer, you probably don’t need to learn that material, and it would be better to move on to something more actionable.
Related: Winning Strategies for Prospect Meetings and Documentation