As the stock market continues its upheaval, it may seem obvious that financial advisors should contact clients with advice and assurances. But is that the best move?
Michael Kitces, chief financial planning nerd at Kitces.com and head of planning strategy at Focus Partners Wealth, recently suggested that trying to reassure those who haven’t been paying attention to market news, and who don’t normally hear from their advisors, might actually make clients wonder if they’re supposed to be "freaking out."
A number of advisors appear to agree, based on a poll that Kitces took on LinkedIn and comments on his post, although a majority indicated they do contact all clients during market volatility.
When markets get volatile, Kitces wrote, most advisors “have an impetus to reach out to clients and try to calm them down."
But there's a caveat, he said: "Sometimes reaching out to clients to say ‘don't worry, you're going to be OK’ actually MAKES them worry because they hadn't been paying attention UNTIL we went and said something to them!”
Kitces recounted a conversation with Daniel Egan, Betterment's director of behavioral finance and investing, who found that targeting messaging to clients who were nervous and needed to see something but not the rest was a good balancing point.
In his poll, Kitces asked readers: Do you proactively send emails out to clients during times of market volatility?
More than 1,200 responded:
- Nope, don’t want to worry them – 13%
- Yes, send to all – 52%
- Only to most nervous clients – 21%
- Call them, but no emails – 14%
“The results largely fit what I would have expected. For advisors who regularly send communication to clients already (e.g., a monthly newsletter), fitting in some recent market commentary is natural,” Kitces told ThinkAdvisor by email.
“For advisors who don't, though, it can feel 'jarring' to clients to suddenly get a communication about markets when they haven't in the past; some advisors do this, but others worry it will create more nervousness than it solves, so more targeted approaches (e.g., reach out to the clients who typically are nervous when markets get volatile, or simply pick up the phone and help talk it through with them) tend to be more common,” he wrote.
Comments on Kitces’ LinkedIn post reflected the diversity in advisors’ approaches to clients in turbulent markets.
“We simply send a monthly check-in and comment on whatever is happening at the moment, we don't send out just because the markets are down, etc.,” commented Derek N.H. Notman, founder and CEO of Couplr AI.
“The only thing that matters is the conversation *before* this week, during onboarding or in regular meetings. Ad nauseum. If this is the first time you’re discussing, it’s too late,” Brian Hasling, financial planner with Modern Financial Planning, commented Tuesday under Kitces’ post.
On Thursday, as the stock market experienced another steep selloff, Hasling indicated on his own LinkedIn page that his approach had changed since a post last week in which he indicated that how and whether to talk to clients depends on previous conversations with them.
“I've changed my tune on reaching out to clients — since this post, I have reached out to every single one. Everyone has appreciated it,” Hasling posted.
“You don't have to bring up specific economic data if you don't want to. At this point, everyone has feelings about what's going on. They've absorbed what they want to hear already. Instead, I let them know we're glued to their accounts, and beginning to execute our time-tested, proven plan to help them come out stronger on the other end of this.
“If they like texts, text them. If they like email, email them. If they like calls, they'd love to hear your voice,” Hasling wrote.
Ivan A. Schleder, financial advisor with Ameriprise Financial, commenting on Kitces’ post, said,
“I proactively reach out to all my clients during volatile times like these. I don't think about if it will MAKE them worry or not. If they're not worriers, they'll appreciate the check-in. If they're worriers, they'll have questions and concerns, which you can address specifically, and they'll appreciate the check-in.
“If they're not worried, but your check-in makes them worry, address their worries, and they'll also appreciate the check-in. Bottom-line, they will all appreciate the check-in! And they'll always remember that you took the time to do so, which is what really matters,” Schleder wrote.
“Did a lot of this today and had the same experience you’re describing,” responded Matthew Koppelman, co-founder and managing partner at Precision Wealth Planners.
“I onboarded a lot of new clients in ‘22 from advisors who had dropped the ball in terms of communication so in times like these, I don’t see how extra communication could end up hurting the advisor. If someone isn’t worried, use this as a chance to see how their family is doing and just catch up for a quick 5min,” he added.
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