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Practice Management > Marketing and Communications > Client Retention

4 Tips for Working With Clients When Markets Are Volatile

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What You Need to Know

  • Advisors need to understand that market swoons are key times to contact clients.
  • Help yourself using CRM to segment your communications to clients.
  • Reassurance and pushing the long view on investments can calm client nerves.

If you want to market your firm and build a client base that raves about your services, one of the best things you can do is get proactive during big market swings.

Here are four tips to effectively engage clients at critical moments:

1. Remember loss aversion

Advisors are keenly aware of loss aversion when it comes to long-term investing and risk management. But have you considered how loss aversion plays into day-to-day decisions and reactions?

When the stock market falls dramatically, loss aversion drives an acute emotional response in many investors. Yet, selling at a bottom is the exact wrong decision. And even if we know that (and even if you’ve explained this to your clients before), your phones still will ring during a sell-off.

Getting proactive is one of the best — and only — ways to keep your clients informed and at ease.

Start by sending a mass email out to clients when there’s a big market event (anything that makes the evening news.) This type of outreach can get ahead of the emotional reaction by reminding clients of the need to approach investing logically.

2. Engage clients strategically

Reaching out to clients goes a long way. It shows you care and that you’re in touch with their needs and concerns. This is particularly important with any clients you haven’t spoken to in a few months.

But to really make an impact, your outreach needs to go a step further. Ideally, any email you send should do the following:

  • Explain what’s happening to the best of your knowledge. Sometimes, there’s no clear explanation to big sell-offs, or people may disagree over the cause. That’s OK. The goal is to translate what the financial media is saying into English.
  • Provide context. If markets are moving because of a rate hike or something with precedent, explain how frequently those kinds of moves happen and share a bit about possible outcomes … without offering any kind of guarantee, of course.
  • Reassure clients about your course of action. After all, this sort of event is why they work with an advisor, and why you build portfolios the way you do.

As a final bonus, consider sharing a “warning” of some kind. That is, a gut check to remind clients of the risk involved in an emotional response, versus sticking with their long-term financial plan.

Use statistics and facts from entities you trust, and those that have name recognition with your clients. For instance, research from Morningstar shows that in the 20-year period from 2000 to the end of 2019, stocks returned 6.1%.

If you missed the 10 best days over 20 years, your returns would be just 2.4%. Miss the 50 best days? Now, you’ve really lost money — you’d be down 5.5%.

Data like this illustrates what happens if you sell on emotion. You risk missing those best-performing days — which aren’t predictable. In fact, during the Great Recession, many of the best trading days occurred before the market hit its 2009 bottom.

3. Segment if you can.

A market sell-off is going to mean different things to different clients. Someone near retirement is likely to be more concerned than a younger investor. And the implications may be more complex, depending on how you’ve structured their portfolio for income and growth.

Consider segmenting your clients so you can send more personalized information.

If you aren’t familiar, segmenting simply means sorting your clients into different groups, or segments. Then, you’d send a different email to each segment. Clients who are retired or near retirement would get a different email than a younger client with an aggressive portfolio.

This segmentation allows you to get far more personal without reaching out to each client directly. Sending one email per segment can help you achieve better results than a single email to all of your clients, while still saving you a significant amount of time.

Use your CRM to help categorize clients and make the process easier.

4. Demonstrate your value.

Sending an email that explains what’s happening, and how your clients are prepared, is one way of demonstrating your value. But it isn’t the only way. This is also a great opportunity to emphasize a holistic approach to financial planning.

According to Aon and Money Management Institute, 52% of investors said they valued financial advice more following the pandemic and associated sell-off in March 2020.

The study also showed that investors who formed their opinion of markets during the Great Recession (namely, millennials) are more likely to focus on planning, since they recognize the need to be proactive about managing finances through market events.

But all that data just summarizes what you already know. It’s easier for clients to stay the course through major market events if they think about their investments in the context of a big picture financial strategy.

You may not be able to address personalized financial plans in a broad email blast about market moves, but you can certainly discuss investment performance in that context when you meet with clients one-on-one.

Andrew Ladwig is vice president of Business Development at Advyzon, a cloud-based platform that combines portfolio management, customizable performance reporting, trading and rebalancing, client web portals, client relationship management (CRM), client billing, and document storage.


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