Market volatility is here again. As an IFA, this won’t be the first time you and your clients have experienced a market shake-up, this time due to the US attack on Iran and subsequent conflict ensuing across the Middle East region.
Many of your clients may already know the score: volatility is par for the course and the best way to handle it is to keep calm and carry on.
However, some may understandably be shaken by the constant barrage of sensationalist headlines, especially if they plan to decumulate soon or are already retired. As their adviser, it is your job to reassure them and help them carve a path forward.
Here are three simple tips for keeping clients calm when markets are not.
1. Reassure rather than lecture
If a client wants to know exactly what is happening in the geopolitical landscape, they will head to a news source that’s reporting the action directly. As their financial planner / adviser, your job is not to deliver political news.
In other words, try not to fall into the trap of over-explaining what is happening and why markets are yo-yoing. Most clients don’t need to know the granular details – they simply want to know that they will be OK, and that you have their best interests at heart.
So, in your communications, focus on:
- The client’s feelings
- Reassurance
- Long-term thinking
Rather than:
- What’s happening overseas
- The ins and outs of daily market movements.
This will help keep clients calm and focused on their own plans.
2. Tailor the conversation around their knowledge, attitude to risk, and time frame
Every client is different.
Some may be unbothered by the day-to-day ups and downs of the market, while others could panic the moment their portfolio begins to trend downwards.
The solution here is to remind yourself of previous conversations with the client you’re speaking to and tailor the conversation around them.
For instance, if they are only a year away from their planned retirement date, the conversation may need to centre around decumulation and risk mitigation. On the other hand, a client who is in their 40s and still accumulating may simply need an email in their inbox telling them to keep calm and carry on.
3. Try not to speculate
In times like these, clients often ask questions to which you simply do not know the answer.
- Are energy prices going to be high for the next few years?
- Will my pension suffer?
- Should I be buying into safe haven commodities like gold?
It’s easy to give someone an answer that sounds certain, thinking it will make them worry less. But if your prediction isn’t correct, it may only make them worry more, and could potentially lead them to distrust you.
You’re human too – saying “it’s too early to tell” and having a genuine conversation is sometimes more than enough.
4. Remain empathetic to their concerns
Although it is entirely obvious to you that market volatility passes with time, it is not always obvious to someone who is watching their life savings go up and down on a graph.
Remaining calm is one thing, but if you come across too nonchalant, it may appear that you don’t care how they feel or take their concerns seriously.
This is a hard line to tread. Over-communicate and you might give the impression that you’re worried about markets too; under-communicate and clients could feel they’re dealing with their anxieties alone.
Once again, this is about tailoring your communication to the individual. A 10-minute phone call may be enough to assuage someone’s concerns, while another client may wish to pay you a visit in the office or have a longer online meeting to discuss the impact of volatility on their investments.
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As such, we are committed to helping you do the right thing for your clients – be it through email communications, a user-friendly website, or CPD that helps you improve what you do.
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Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.