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April 2020 BYB
INVESTMENT EXECUTIVE
You’re the coach
How to help clients through financial downturns
● BY DONALEE MOULTON
since the great depression, dips,
downturns and nosedives in the finan- cial markets have set investors on edge. In the wake of Covid-19, the razor’s edge has never been thinner. As financial advisors well know, sleepless nights often transform into decisions that are more ill-conceived than prudent. Coaching investors through these uncertain times — before, during and after a crisis — is critical.
When the market drops, conversa- tions with your clients become vital. The importance of those exchanges does not wane as a crisis abates or, in the case of the coronavirus, isolation becomes standard operating procedure. “Financial advisors need to connect with their clients to find out what concerns them,” says April-Lynn Levitt, a certified financial planner and business coach with The Personal Coach, which offers customized business coach- ing for advisors, in Oakville, Ont.
Dig deep, advises Chris Hornberger, a certified executive coach in Halifax. “You need to understand your clients’ specific concerns. Identify what they are worried about.”
Forward projections help you do that, Hornberger adds. Determine where cli- ents want to be financially (and other- wise) in five years’ and 10 years’ time. Review their financial plans to see if, even in the midst or the wake of an economic upheaval, those goals still can be attained. If not, discuss how a plan could be revised to make them attainable.
Taking a step back in time with a client also can be beneficial, says Hornberger. “Ask them to recall a similar time previously when they were concerned. Ask them how they got through it. Ask them how their life — and their finances — were affected.”
Coaching clients is fundamentally about building trust. Will clients natur- ally turn to you after the storm has passed? “That is a measure of their trust in you when they reach out,” says Hornberger.
Hornberger adds that not receiving calls from clients is not necessarily a good thing before or after a crisis. “Do not assume if you are not hearing from clients [that] it is because they are not worried. If they do not hear from you, it can create distance.”
Looking at the issue from more than one angle and time frame can also help clients put any declines in financial mar- kets in perspective. Covid-19 aside, mar- ket downturns are status quo. “Remind clients that we [recently were] in the 11th year of a bull market, which is historically much longer than normal, so downturns shouldn’t [have been] unexpected,” notes George Hartman, CEO of Market Logics Inc. in Toronto.
Coaching clients through uncertain times is about more than pointing to longer-term projections. “Play a leader- ship role when things are bad. Go beyond the investment information. See the big picture,” says Levitt.
Coaching is ultimately about building a relationship that will stand the test of time and tumult. That relationship requires ongoing touchpoints as situations change, often at breakneck speed. “Communicate before, during and after,” says Levitt. “Define your market philosophy.”
Clients need to know you are there when they need you — and even when they don’t. But during downturns and their aftermath, visibility is paramount. “It’s about sharing. It’s about being proactive,” says Hornberger. “Reach out. Communicate early and often. Reassurance is central to this process.”
In situations such as market down- turns, when you may be concerned that clients may blame you for poor perform- ance, there’s a natural tendency to be guarded. “Our first instinct is often to defend,” says Levitt. “Our recommenda- tion is to step back. Ask the client what concerns them; then you can offer solu- tions and advice.”
Stepping back can be hard, Levitt adds: “Clients can be confrontational. There is so much uncertainty, and it is not just financial.”
Clients aren’t the only ones who have anxious nights when the markets go in unwanted directions. You’re adversely affected in two significant ways. First, you’re worrying about your clients and their concerns. Second, you’re worried about your own business in both the short and long terms. Frightened clients can go elsewhere or exit the investment market altogether.
You also must focus on yourself when the going gets rough. “You need to take care of yourself. Meditate, exercise, get out in nature,” says Levitt. “You need to handle the stress and not get sick.”
You can feel better knowing you’ve laid a solid foundation for whatever crisis — nat- ural disaster, market crash or pandemic — clients are in the midst of weathering. Indeed, your coaching role begins before there is anything to worry about, says Hartman: “The key to mitigating concern in market downturns is to prepare clients ahead of time for the inevitability that mar- kets will likely be volatile during the time [clients] are invested.”
Hartman suggests you make a point of talking with your clients about the ups and downs of market performance during every annual review: “This should include historical performance illustrations, mag- nitude of decline [and] recovery periods.”
Managing clients’ expectations is essential, agrees Levitt: “Everyone will see a slowdown. Before anything happens,
you should be talking to your clients about downturns.”
It is important to ensure you have a current market meltdown plan in place, Levitt notes: “This does not have to be complicated. If something happens, how can you be ready to reach out and to whom do you reach out personally? This is not a case of sending out just one email.”
Your meltdown plan will contain such information as which clients need to be on speed-dial for reassurance and which cli- ents like to buy during a downturn. Your plan also will contain draft emails and templates that can be sent quickly to all or certain clients with little revision. Where appropriate, the information can reaffirm that there is insurance in place and/or a rainy-day fund.
“Emphasize [to] clients [that they] are working toward a goal — not reacting to market downturns,” stresses Levitt.
Post-crisis is an ideal time to update your plan: review what worked well, what worked as planned and what needs to be revised and rethought. As a crisis wanes, it also is an optimal time for you to identify gaps in your market meltdown plan and ensure those gaps are addressed for next time — because there will be a next time.
Your updated plan also must spell out how you will connect with clients, and continue to connect with them if you can no longer get to your office, if power ser- vice is more than sporadically interrupted or if concerned clients cannot meet with you face to face — perhaps because much of the community has been shuttered. Literally. IE
“Do not assume if you are not hearing from clients [that] it is because they are not worried. If they do not hear from you, it can create distance”
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