Our business as retirement planning professionals has a certain ebb and flow to it. Calm turns to chaos and back to calm again. We experience the euphoria of new highs and a strong economy, and then a storm that brings us economic darkness and negativity. There is a cyclicality to what we do and the advice that we give our clients.
There are also moments at which the advisor can cement the relationship with steady and calm leadership, and most of those times are at the moment where the client has the most fear. Instances where a client loses a job, has a spouse pass away, or gets divorced are all examples of this.
It is at these times of greatest uncertainty that an advisor can help them see the bigger picture. It is at these moments that clients truly become loyal to you.
And since the 4th quarter of 2018 gave us a glimpse of what investment accounts (and the fear) will look like during our next recession, it’s my opinion that each financial advisor treat portfolio drops as opportunities. It is your opportunity to communicate, it is your opportunity to reevaluate their plan, and your opportunity to help them see the bigger retirement picture.
The first thing advisors should do is prepare your clients in advance. Tell them in what instances you would make changes to their accounts, and in what instances you would recommend against it. Make sure they know you are carefully monitoring the situation and are ready to act, or advise they stand pat.
A second point of emphasis for advisors should be in communication. Realize that answering phone calls and emails quickly and with a calming presence is absolutely critical. Our society has become accustomed to immediate communication, and this is your opportunity to calm fears and make your clients feel valued. Make this a priority.
The last and most important fact is that a recession is your best opportunity to market. When markets are up, money tends to stay invested where it is. When markets are down, and emotions are high, people are willing to change. Some advisors become overwhelmed and don’t communicate, or communicate poorly if they do at all. You can gather assets under management and provide an investor a fresh start. These assets are also at a depressed value and all you need is the eventual recovery to watch your practice flourish and set new highs with a fresh set of new accounts.
Every recession should produce the same thing: greater client loyalty and a whole bunch of new clients looking for an advisor they can count on. Bring it on.
Josh Decker is a certified financial planner at EFS Advisors.
Opinions expressed are those of the author, and do not necessarily reflect the views of NTSA or its members.
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