When stocks go down, communication from your financial advisor should go up. However, many financial advisors don’t know what to say to clients during times of extreme volatility. So, they either don’t say anything or they communicate but don’t want to keep reaching out, since they don’t know how much communication is too much.
After all, how many ways can you say the same thing over and over again – “Just stay the course?”
To help, I’ve got 4 advisor communication strategies that do work that I suggest you utilize if you are a financial advisor right now.
- No one leaves their advisor for communicating too much. But they do for not communicating ENOUGH.
- Put “this time” into historical context (Dimensional Fund Advisors Bull vs. Bear Chart)
- Use visuals To communicate more effectively (Bank of America chart)
- Help them remember why they hired you. You help prevent emotional-based decisions. (Equity Allocation Change if S&P 500 falls 10-20%)
1. Remember that nobody leaves their advisor for communicating too much
When you don’t hear anything, this is when fear seeps in, and you start to make up your own assumptions about what is going on, so communicating more is a better strategy than not communicating enough. For example, YCharts did a study in 2019 where most clients feel that they are not engaged ENOUGH by their advisor.
2. Put “this time” into historical context
Show the ups and the downs of the market over the last 100 years, and it helps people to see historically what has happened, and putting it into a visual helps to contextualize what is going on for clients.
3. Use visuals to communicate more effectively
In the chart above from Bank of America, you can see how difficult it is to actually time the market. And seeing this helps them quickly digest those numbers, especially since our brains can process imagery 10,000 times faster than text.
4. Help them remember why they hired you
You are going to help prevent them from getting emotional with their money and making a bad decisions with their money. Show them a chart like the one below that shows equity allocation change in response to the S&P falling 10-20%. We know that institutions and advisors are going to be much less emotional than the decisions you make with your own money.
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