How To Talk To Older Clients About The Current Economic Crisis

By Michael P. Sullivan

Financial representatives need to understand how to communicate with older adults about todays difficult economic times.

Uncertainty and fear often cause older clients–those in their early 50s and up–to panic or be frozen into indecision about their investments.

Older clients represent the lions share of wealth in this country and usually dominate the book of business for most financial advisors.

Psychological research shows that these older adults make investment decisions on a different basis than younger individuals. The latter rely mainly on analysis based on the facts and logical reasoning. Older adults rely mainly on their experience in life.

The problem confronting older clients today is that their experience does not appear relevant in the present crisis and, therefore, they have no basis on which to make investment decisions.

The fact is, however, that older clients do have life experiences that are highly relevant. Financial reps need to remind their older clients of this when presenting investment options and directions.

Put current events into an historical perspective, for example. This helps them use their own lifetime of experiences to put things in a larger picture. You might say:

“I know these are uncertain times now and, like everyone else, I am as concerned as you are at times. When I begin to get upset, I remind myself of history.

“During the Great Depression, when unemployment reached 25%, Franklin D. Roosevelt said something we all remember to this day: The only thing we have to fear is fear itself. Things today are nowhere near as bad as they were then. America, including the economy, is stronger in every way. We got through it.

“At the beginning of World War II after Pearl Harbor, we were in bad shape. Japan and Nazi Germany were far stronger than our present enemies, and the United States and its allies were much weaker than we are today. Yet in just four years, we won that war and soon we were on the path to freedom and prosperity.

“After World War II we had the Cold War. The Soviet Union was the greatest threat because of its nuclear capability. It was a far more dangerous opponent than our present enemies. And dont forget, the Cold War lasted for over 40 years. Yet, despite all the danger and the huge amounts of money the United States spent for defense, the economy grew and grew and so did the stock market.”

The point is, compared to those very enormous dangers that threatened the existence of many people, todays fears really dont seem like much.

You can suggest that, in time, the economy will likely recover and start to grow again. You can discuss why, based on history, the stock market will eventually follow the economy up.

You might add that, when a turnaround happens, those who were able, in todays market, to overcome their fears and look to the future stand a good chance of being better off than those who waited until there was no danger. Its not guaranteed, but its possible.

Naturally, this discussion will be couched in the context of the clients needs, time horizon and goals. You will be offering a perspective, not a prediction. Present this as something your older client might consider as part of the decision-making process.

Dont expect older investors to agree immediately that the future will be rosy or to conclude that it is time to jump back into the market.

You have given them a different perspective on the problem and a way to make their life experience relevant. Now, the next step requires them to connect their decisions to invest to things important in their lives. We call these “life issues” and they range from what they are going to do in retirement to how they are going to enjoy their grandchildren.

If you make those connections clear, older investors will begin to come back into the market.

Michael P. Sullivan is principal of 50-Plus Communications Consulting, Charlotte, N.C. His e-mail address is Mps50plus@aol.com.


Reproduced from National Underwriter Edition, April 28, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.