As the end of the year approaches, pretty much every advisor out there is starting to worry about those dreaded annual client reviews. During a financial year that is being referred to as the worst since the Great Depression, one can only imagine how horrified clients will be when they realize just how much longer they'll have to keep digging ditches and frying fries.
It's in years like this one that financial advisors earn their money and their grand award trips. If you can hang on to your clients through this mess, you can rest assured that they are yours for life. With that being said, what exactly can you say to ease your clients' pain?
When the going gets rough, I always find it helpful to blame someone or something. One suggestion you may want to consider is to blame George Bush. With a presidential approval rating of -32 percent, he is as good a target as any. While you're throwing Mr. President under the bus, try to work in the phrases The Iraq War, Osama Bin Laden and Dick Cheney as often as you can. My guess is many of your clients will agree with your assessment.
If blaming the commander-in-chief doesn't work, try blaming all those formerly ultra-rich Wall Street executives and hedge fund managers for manipulating the markets into oblivion. And for those New Age clients in your book, my suggestion is to simply say, "This has been a bad karma year." (Then bow your head and meditate: "Oooohhhmmmmmmm.")
If you're uncomfortable with the blame game, another tack you might take is to try to convince your clients that this disastrous year has actually been a good thing. Remind them that when the share price of their mutual fund goes down, their re-invested dividends are actually buying them more shares! Some clients will understand this concept, while others will reach across your desk and slap you.
Overwhelming clients with statistics is another tactic that can help prove to them that this year has been a blessing in disguise. You can tell them that -- in addition to all the food stamps and government cheese they are able to get -- there's a good chance the stock market will be up substantially in 2009. Inform them that, in years when the market has had a major decline, the stock market has rebounded the following year. You might even try the old line, "Now is a great time to buy; the stock market is having a major sale!" For safety's sake, step back out of arms' reach when you say this.
You may also tell your clients that they are being tested right now. Years ago, when they still had money, you both came up with a rock-solid investment strategy. You both knew there would be up markets and there would be down markets. This just happens to be one of those down markets. Try saying something like, "In times like these, our strategies are tested. Do you want to cut and run now, or do you want to pass the test?" This might convince them to hang tough -- after all, who the heck wants to flunk a test (besides my kid)?
If none of the above seems to be right for you, go with the ambiguous. Say something along the lines of, "The market didn't perform as well as we had hoped this year." Or, "We had a few hiccups in our economy that no one saw coming." Or, simply say anything with "subprime" in it at least three times.
Will any of these techniques actually make your clients feel better about this year of economic Armageddon? Probably not. But if you have to go down, you might as well go down swinging.
Once a mildly amusing comedian, Bill Miller now works as a recruiter for a top independent broker-dealer; reach him at firstname.lastname@example.org.