Talking with clients on a regular basis should be a standard part of any client/advisor relationship — no matter what the markets are doing.
“It’s part of the job,” says Andrew Pyle, a wealth advisor with Pyle Wealth Management, under ScotiaMcLeod Inc. in Peterborough, Ont. “The job of a financial advisor is basically to be the manager of that client’s financial welfare, from planning to investment management.”
To help make that job a little easier, follow these tips to keep clients calm during volatile markets:
> Think long term
Keeping your clients focused on their long-term goals can help them avoid panic mode.
Global markets are more connected now than they have ever been, Pyle says. That means traditional ideas of being able to buy into a “safe” stock or market are no longer feasible.
It’s important to constantly re-evaluate your clients’ asset allocations, he says, and to remind them of their objectives and long-term strategies.
> Review portfolios
Meeting with your clients regularly to discuss their current asset mix can help you avoid panicked phone calls when markets are down.
Advisors often make the mistake, Pyle says, of never rebalancing a client’s portfolio in a disciplined fashion after the initial evaluation.
Make sure you meet with clients every year, he says, to do a complete review of their portfolios.
> Have an open-door policy
Let clients know that they can talk to you at any time if they have second thoughts about their investments.
After Pyle performs a review with a client, he always tells the client that he or she is welcome to call him or his team at any time to talk about their investments.
Even if the client calls only a few months after the review, it’s important to determine whether his or her risk tolerance has indeed changed. If it has, you must adjust the portfolio accordingly.
> Talk about what you know
Sometimes, when a client is panicking, Pyle says, an advisor might try to have all the answers. But the truth is that no one knows what’s going to happen tomorrow.
“It’s one thing to reassure clients that their asset mix is appropriate and that this is a long-term strategy,” he says. “It’s another thing to sit down with the client and try to provide scenarios and viewpoints of what’s happening in the world.”
If a client is worried about their investments, he says, be honest about what you know — and don’t know — about the markets.
> Make the first move
Don’t wait for your clients to call you. Instead, call your clients during times of market volatility and ask how they feel about their portfolios.
If a client is worried, find out the nature of his or her concern. Is the client feeling concerned because of some bad news he or she saw in the media? Or is the client up every night wondering how he or she will have the money to retire?
If the latter is the case, it’s time to invite the client in for a meeting.