The market can be bananas (b-a-n-a-n-a-s). When charts flip flop on the regular, it’s natural for all to have concerns about their futures and if their savings and investments will last them into retirement. We’ve come up with a few tips to communicate effectively with clients to help alleviate any anxiety.
Be proactive in client communication
When markets drop significantly, contact clients before they reach out to you. If using RightCapital, you can do this in the advisor portal by sending personalized or general messages within tasks. Follow up with personal messages later on if your initial reachout is general and remember that newer clients in particular may need additional attention. Include what is known about the current state of the market and how you’ve prepared for downturns by considering multiple scenarios. Reinforce that you are around to help. If you’re active on social media, it’s worth putting this communication out there as well.
Pivot the conversation to long-term considerations
Help the client understand the actual impact of a recent market drop. Use the financial plan to shift your clients' focuses from short-term ups and downs to long-term investment and retirement goals. Review the RightCapital retirement analysis tool to demonstrate that they may still be on track or to identify any shortfalls that you can help them adjust for. Additionally, remind your clients that losses are not realized unless they sell their investments.
Remind clients that recessions are natural
Advisors know that downturns in the market are natural and that rebounds occur, but some clients may need to be reminded. Demonstrate how clients’ financial plans account for uncertain scenarios and point out that the market has never been in a recession where it hasn’t later recovered to a new market high.
Focus on what can be controlled
As with other situations in life that are out of our control, it can be helpful to focus on the things your clients can change. In the case of a volatile market, your client might consider picking up extra shifts at work, starting a side hustle, or switching to generic brands at the store to reduce grocery bills. Anything saved could be invested in long-term holdings. With RightCapital, you can demonstrate the impact of controllable factors with proposed plans directly next to current plans.
Bring your clients further into the planning
Help clients understand the impact of the market and their own adjustments by getting them more involved in the planning process. If you’re using RightCapital, provide access to the client portal and the mobile app so they can analyze their finances on the go. Adjust the settings so clients can play around with “what-if” scenarios themselves and review the probability of success, which will help them stay focused on long term goals and avoid panic. Imagine if clients could verify for themselves that goals are still achievable by swiping through screens in the mobile app, branded with your firm’s own name, colors, and logo.
Utilize available technology and visualization tools
In times where account values could change significantly week by week, integrate performance reporting platforms, custodians and clearing firms, and analytics programs with your financial planning software when possible and ask clients to use any account aggregation tools to keep exact balances up-to-date.
Focus on probability of success and specific risks with the RightCapital stress testing tool. Probabilities of individual stresses (for example, dropping equity markets either immediately or at retirement, a reduction of Social Security, or increasing inflation) are easily adjusted, added, or removed, so you can focus on the most vulnerable areas for each client.
Use the RightCapital Vault cloud storage to send updates, such as our personalized plan summary, Snapshot, where you can also enter individual assurances if they’re still on track or recommendations to get them there if things have changed.
Make yourself available
Communication is key and during times of volatile markets, it can be especially important for relationship-building. Remind clients that you are there for any questions they may have and set aside time for calls, emails, and screen-shares so they can be aware of exactly how they are doing.