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4. Client Communication Is Important

Technology > Investment Platforms

How to Help Nervous Clients Now

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Nearly every advisor has had to work overtime during the first six months of this year, busy re-assuring clients who are anxious after seeing their portfolios take a hit. Many advisors no doubt have pointed out that ups and downs are an inescapable part of investing. In other words, stay the course.

But what can complicate these conversations is when clients come armed with something they’ve seen on one of the financial networks or read online that forecasts more doom and gloom — something that has become commonplace in recent weeks. Indeed, perhaps the only thing clients hate more than losing money is the prospect of losing more of it.

This dynamic helps to explain why top advisors master so much more than the technical aspects of their job. They also play the role of a psychologist, able to provide clear and convincing direction when emotions run high.

Still, even the best advisors run up against a brick wall from time to time, unable to placate jittery clients, no matter what they say or how they say it. This is where technology can help.

Unquestionably, the rise of technology in financial services has, in many cases, made being an advisor not only easier but more lucrative. Like in other industries, good tech creates scale and more efficient business processes for firms, enabling teams to serve more clients than ever. In the end, it all adds up to more revenue.

Yet the best tech platforms don’t just save time and create more opportunities to grow. They also facilitate better, more meaningful real-time client conversations, particularly when nerves are frayed.

For example, let’s say a client comes to their advisor and says they want to get out of equities entirely. To justify it, they pull up a news story on their phone quoting a Wall Street analyst with a year-end target for the S&P 500 of around 3,000 – which is how Morgan Stanley sees it were the economy to enter a recession. If a drawdown like this happens, the index would slide roughly another 25% this year and finish 2022 down by nearly 40%.

Naturally, clients would get antsy at the prospect of that happening. Advisors may try to calm their nerves by telling them their portfolios have performed well in the recent past. Or sometimes, they’ll mention that it takes time to churn through market cycles, pointing out that while stocks are down now, it’s only a matter of time before they go up again.

Though these things could be true, the problem is that wishy-washy statements like this are unrelated to a client’s immediate goals and don’t make them feel better. Worse yet, they make them less likely to listen to their advisor, which will put the relationship in danger.

It’s why technology platforms with a forward-looking focus, armed with risk and goals-based analytics, including scenario analysis, are a vital complement for real-time, advisor-client interactions like this.

Such tools allow advisors to demonstrate exactly what would happen to a client’s portfolio in a world where the S&P 500 hits 3,000 (or some other theoretical benchmark). Importantly, they would also show what has occurred following similar drops in the past and the time it took for the market to recover, hinting at what could take place in the future.

Armed with this type of information and given a client’s goals and time horizon, they may still be in good shape, even as the advisor could still make moves to minimize losses. Or perhaps the situation is more serious. Either way, the added insights and dynamic reporting create a better framework for conversations beyond, “Don’t worry, stocks always go back up.”

Often, there’s a fine line between a client being a collaborative partner in the investment and planning process and them being their own worst enemy. That’s especially the case when markets are getting bludgeoned, much like during most of 2022.

Advisors and firms can clarify that distinction by leaning more heavily on advanced technology tools and platforms that can enable a much more dynamic and meaningful advisor-client engagement.


Andrew Aziz is executive vice president of d1g1t, an enterprise wealth management platform powered by institutional-grade analytics and risk management tools for family offices and high-net-worth-focused RIA firms. He earned a Ph.D. in finance from York University’s Schulich School of Business.

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