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Should You Call Your Clients When the Market Plunges?

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The Dow Jones Industrial Average fell 3.5% Monday and was down about 3% late Tuesday as fears tied to the coronavirus and its economic impact continued to spread.

That had financial advisors and other professionals pontificating on the best strategies to respond to the volatility that garnered the attention of investors worldwide. 

Nyle Bayer, chief marketing officer of Helios Quantitative Research, who’s worked for the RIA Up Capital Management, suggested on Twitter that making a few calls might be helpful: 

“Getting zero inbound calls from your clients today is one thing, making zero outbound calls to your clients today is another!” he tweeted on Monday. 

“You mean like use the [telephone]?” asked Manish Khatta, president and chief investment officer of Potomac Fund Management.

“People might actually like to talk to you! Lol” replied Bayer. 

But Benjamin Brandt, CFP, of Capital City Wealth Management gave this approach a thumbs-down.

“I used to make outbound client calls during particularly difficult days/weeks in the market. I found that more often than not, I was drawing attention to something the client was ignoring before my call, and I only made things worse,” he said Monday using his Twitter handle @RetireMeASAP.

“I’ve found that managing return expectations and running clients through down-market scenarios on a proactive basis during good times in the market is much more effective,” added Brandt, who hosts the Retirement Starts Today podcast. “The phone didn’t ring once today, and I didn’t call a soul.

Bayer acknowledged the pros and cons of this strategy.

There is always more than one approach. However, more often than not, clients appreciate your perspective and attention to an event that they are hearing about from someone else,” he said on Twitter. “Not saying call everyone, but you certainly should call someone.”

Addressing clients and volatility, I found the same thing @RetireMeASAP. We are hyper focused on it but they’re not. At least not initially,” said Vincent Barbera, CFP and co-founder of Newbridge Wealth Management, in a tweet.

“100%. A couple years ago I called a particular worrying client after a small drawdown. He was on vacation and had no idea until I panicked him,” tweeted Bill Nickles, founder of Yellow Dog Financial.

“Same here. It was exhausting mentally and it alarmed clients more than it helped. I also manage expectations from the beginning and contact all of them on a quarterly basis to touch base and see what they’re thinking,” explained Edgardo Luis Ortiz Flores, a private client advisor at JPMorgan Chase Bank, on Twitter.

More Thoughts on What to Do 

Bayer clarified what he means by client contact: “I think Ben is misinterpreting my comment. I am not advocating to “panic-call” your clients at all. However, I am sure you can identify a few that are passionate about investing and would appreciate your insight?” he tweeted.

“Honestly, I am very fortunate, a lot of my clients went through 08 with me. Our relationship is one that they know if I am calling its serious enough to discuss that days events. Otherwise I feel its just feeding the ‘noise’ they hear. Just my viewpoint,” said Mike Molitoris, founder of Flagship Wealth Management, in a tweet.

“You should always be viewed as the signal imho!” Bayer tweeted back.

“Right I think we are saying the same thing on that …” Molitoris responded. 

“This is a great point. I think many advisors are commoditizing the asset management portion of their business without even knowing it!” tweeted Bayer.

Advisor Ryan Hughes of Bull Oak Capital had the last word on one thread of the conversation, in his reply to Brandt: “Agree 100%. I didn’t receive any calls today and I didn’t make any calls. Honestly, if I called my clients, they would likely think I was worried, which in turn would make them more worried. I plan to discuss the coronavirus and the markets in my monthly email update.”

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