Opinion - FA Playbook

Op-Ed: Advisors need to help clients get back to basics during this volatility

Natalie Wolfsen, EVP/chief solutions officer at AssetMark, Inc.
Key Points
  • The most effective financial advisors are managing both financial and emotional well-being for clients during the coronavirus-driven downturn.
  • Remind clients that a focus on long-term investing is of great benefit to them, the country and the world.
  • Reach out to clients, create virtual communities and remind yourselves and clients that there are still many wonderful things happening in the world every day.
Chad Springer

It's obvious we are living in highly uncertain times.

Markets are extremely volatile, and monetary and fiscal policies change from day to day. Most clients are extremely anxious, unsure of how the market is going to move and how those moves will impact their portfolios.

While financial advisors must continue being proactive – helping clients maintain their financial well-being – the most effective advisors are managing their clients' emotional well-being, as well.

Financial advisors who are proactive in their outreach, helping clients understand the markets and, most importantly, how and why the ongoing changes in valuations are relevant (or not) for their portfolios, are more likely to maintain the solid foundation of trust they've built with their clients.

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Personalizing how big of an impact these market shifts will have on clients' portfolios will allow advisors to have realistic conversations about the kinds of changes, if any, that are necessary to ensure clients are still on track to achieve their goals.

Advisors who do this effectively return to the basics: reminding clients of their long-term goals and making them aware of the permanent impact of making decisions based on fear. Here are some important steps for how to mirror this in your own practice during an extremely challenging time.

Take time to ground clients in the market and the fundamentals of investing. It's important to remember that markets have certain periods of upturns and downturns, and while this may be the biggest downturn we've seen in a while, eventually the economy and markets bounce back.

Another key aspect is reminding clients of the value of investing, why they chose to invest in the first place, and why it's important for society. Focus on the belief that long-term investing has great benefits to individuals, this country and the world, and that, over time, consumers will reengage with the workforce when they have money to spend. Help clients see that if they focus too much on the short-term, it can feel depressing, overwhelming and permanent.

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That's typically when people make choices they later regret.

When markets are volatile, it seems like a lot is out of our control. Many clients will want to make significant changes to their portfolios or get out of the market altogether. These decisions are largely fear-based. This is when advisors can provide tremendous value by not only reminding clients how the market changes and why investing is crucial, but also reiterating why their portfolios were constructed in the ways that they were.

Reminding clients of their long-term goals is an essential tactic for advisors who provide holistic financial advice to keep their clients on track. Whether it's saving for retirement, sending kids to college or planning for a home purchase, portfolios were constructed for a reason.

Advisors who educate their clients about the implications of getting out of the market completely or making significant changes to portfolios – and how those changes could impact their goals and dreams—are more likely to save their clients from making costly mistakes.

Reassuring clients that you have their back ... will make it easier to keep a positive mindset during these challenging times.
Natalie Wolfsen
EVP/chief solutions officer at AssetMark, Inc.

Making slight changes or incorporating tactical solutions might be what's best given the situation, but it's important to take a step back and understand the real implications of letting emotions drive decisions.

While we all are sheltering in place, quarantining and practicing social distancing, it's hard to stay positive. Being isolated is likely exacerbating a situation that is already difficult.

So, now more than ever, advisors who recognize the value of their client and community relationships are reaching out to clients, creating virtual communities and reminding themselves and others that there are many wonderful things happening in the world every day.

It may not seem like it right now, but reassuring clients that you have their back – reminding them why their portfolios are constructed the way they are and the role each strategy plays in helping them meet their financial goals – will make it easier to keep a positive mindset during these challenging times.

—By Natalie Wolfsen, EVP/chief solutions officer at AssetMark, Inc.