Believe it or not, financial advisors can sometimes learn a thing or two from oft-derided folks, such as bureaucrats and politicians. The latest lesson is the importance of good communication.
To be sure, communication itself is often scorned as spin, bumph, or just plain BS. But, done right, it can also be invaluable for managing expectations, easing conflict, and guiding sound strategy.
Two contrasting examples are outgoing British Columbia premier, Gordon Campbell, and chairman of the U.S. Federal Reserve Board, Ben Bernanke. Campbell recently resigned his leadership because of his plunging public approval, largely attributed to his government’s decision to adopt a harmonized sales tax. An HST was introduced in Ontario at the same time, with a fraction of the public outcry. And this can’t be attributed to underlying economic conditions as Ontario was hit harder by the recession than B.C., suffering a much bigger drop in gross domestic product growth as well as higher unemployment. It just seems that the government in B.C. did a horrible job of explaining the move to citizens in that province.
At the other end of the spectrum is Bernanke, who is presiding over a badly stumbling economy, the threat of a double-dip recession on the heels of the greatest downturn since the Great Depression, persistently high unemployment and the looming spectre of deflation.
Yet, by signalling that the Fed is prepared to do whatever it takes to kick-start growth with further quantitative easing, and telegraphing his policy intentions long in advance of the announcement, Bernanke has managed not just to avoid spooking the markets and undermining confidence, but to actually stoke a few tentative signs of recovery.
Economists can debate the wisdom of the Fed’s policy and criticize its decisions, but there’s no question that it has done a masterful job of preparing the markets for its moves, and actually producing the desired effects.
Advisors can do the same with their clients. In tumultuous times, clients might not like the message. But, communicated effectively, they’ll be better equipped to deal with their portfolios, and less apt to simply show you to the door.
Quebec to drop withdrawal limit for LIFs in 2025
Move will give clients more flexibility for retirement income and tax planning