As stock markets gy-rate and the U.S. economic crisis deepens, even the most seasoned clients are getting nervous about their accounts. For many advisors, responding to calls from anxious clients can mean playing multiple roles — as planner, historian and even therapist.

Some clients need advice; some need reassurance; others just need to know you’re looking out for them. Here is how three advisors have tackled the crisis.

> Be Proactive. Kathleen Holland, a certified financial planner with Investors Group Inc. in London, Ont., recognizes that even her more sophisticated clients might experience “statement shock” when they open their quarterly statements in such a rattled climate. To that end, she takes a proactive stance, sending out mass e-mails to her clients whenever markets take a dramatic hit.

Holland has sent out four such e-mails in the past 15 months. The latest message, sent in mid-September with the subject line “Toronto market plunge & your options,” outlined the factors that created the current market conditions, offered some historical perspective and presented some options as to what clients could do.

The last step is critical, she says, because it empowers clients who might feel the need to take action in this climate.

For example, Holland advises clients who draw income from their investments to stop doing so if they can afford it, which gives the investments some time to recover when markets return. She also recommends clients avoid taking any action on riskier investments, with the rationale that moving into lower-risk investments will only crystallize the losses experienced so far. Finally, she suggests that clients with long-term investment horizons consider investing a lump sum, to take full advantage of the market’s eventual recovery.

“I closed the e-mail,” Holland says, “[by] stating that they should expect the turmoil to be reflected in their September 30 statements.”

And when client statements became available online, Holland sent a personal e-mail to each client in the top 20% of her roster to let them know exactly what to expect when they received their statements. “Those were the ones who were going to feel the impact the greatest,” she says, “in terms of actual numbers.”

The majority of Holland’s clients have been with her long enough to have some experience with market declines. And they’re accustomed to hearing from her during periods in which there’s turmoil.

“I make it clear to clients,” Holland says, “that if you hear from me, it’s because there’s something I probably need you to do, and I need you to do it in a short time frame.”

Holland’s e-mails don’t necessarily make the news of a downturn more palatable, but they do give clients reassurance that their advisor is keeping a close eye on the situation.

“Top clients received a couple of hits within a two-week period,” Holland says, “and it helped to manage their expectations.”

The strategy has worked: she has received thank-you notes from clients who were happy to hear that she was on top of things.

> Respond Immediately When Clients Call. When a client calls with concerns, the most important step you can take is to respond immediately, says Blaine Conrad, a CFP with Ramey Investments Inc. in Dartmouth, N.S.

“If a person has a fear or worry and you don’t respond right away,” Conrad says, “that just exacerbates that fear.”

Conrad has provided his staff with the message he expects them to share with clients, and he insists on speaking to each client himself.

A calm voice of reason, paired with reminders that we’ve been through this before, is enough for most worried clients, Conrad says. It also helps to relate as personally as possible with clients, who understandably can get emotional when it comes to their investments. He shares with clients the queasiness he went through in his early days as an investor when Black Monday wiped out a quarter of his portfolio in one day in October 1987.

“That didn’t feel too good,” he says. “But by December 31 [of that year], I got all my money back.”

> Prevent The Calls By Educating Clients. Of course, the best way to handle calls from panicked clients is to prevent them.

With that in mind, Robert Bent-ley, a CFP, registered financial planner and vice president with T.E. Wealth in Toronto, establishes with clients right from the start that the market will have ups and downs.

@page_break@“We can pretty much tell clients,” he says, “that they will have an equity correction of a certain amount in their portfolios every so many years.”

When headlines started hinting at the impending financial crisis in the U.S., therefore, Bentley wasn’t inundated with client calls. T.E.’s emphasis on broad diversification, he says, means a T.E. client’s portfolio doesn’t reflect the dips as dramatically as that of a less diversified investor.

So, while you may not be able to get too specific as to how deep or prolonged the downturn will be, you can offer some historical perspective to help clients remain rational, Bentley adds: “Historically, diversified portfolios of equities have always come back, without exception. We see no reason to believe that it won’t work this time around.”

While his clients won’t necessarily have much to brag about at the neighbourhood cocktail party during market surges, Bentley says, they’re also not the ones left holding severely depleted portfolios during market downturns.

> Take Extra Care With New Clients. New clients tend to require the most delicate handling in uncertain times. Their portfolios haven’t had any real opportunity for growth, so emotions can run high.

To offset this tendency, Holland has sent a personalized e-mail to her newest clients.

“I wanted to make sure that they recognized that this was going to be a short-term blip,” she says, “and that I was going to be walking through the process with them.”

Conrad agrees that newer clients, who are experiencing their first significant downturn, may have more fear. But whether they are new clients or experienced clients who have gone through three or four of these cycles, they still may want to talk. Conrad gets about four phone calls a day from clients looking for reassurance, and he makes sure he speaks to his clients.

As difficult as it is to see client portfolios take a hit in any manner, Bentley says, there is a positive angle to market crunches such as this one. Once things settle down, he says, investors who feel they have been burned by narrowly focused stockbrokers tend to be on the market for advisors with a more diverse approach to planning.

“If history repeats itself, we will expect a number of new clients coming in,” he says. “We usually do pretty well after times like this.” IE