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Technology > Marketing Technology

Volatility and Technology: How to Streamline Client Communications

By Dan Skiles

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We have experienced a fair amount of market volatility during the past several months. It puts a lot of pressure on advisors because everyone is asking: What does it mean? Will it continue? Are we in a bear market? Should I sell everything?

These are the typical questions that arise with declines in the stock market. Often, advisors’ initial move is to reach out to clients with their viewpoint on the current market environment to reassure them that they are in good hands. Your technology as an important part of your communication strategy.

Emailing a market update is definitely the most common communication strategy used by advisors during volatile markets. The basic structure of a market update (and I have seen a lot of these type of messages lately) is fairly simple. Generally speaking, they include four to five main points and might also have charts or graphs of supporting data.

Considering the emotional impact volatile markets have on clients, advisors should consider using more personal methods of communication that can still be used with broad distribution tools, for example, a brief PowerPoint narrated by you. Simply hearing your voice, your inflection, tone, etc., in addition to the content shared, can be more meaningful than a standard email.

When the Dow is down 500 points or more in one day, remind clients of their long-term investment goals. This can be a challenge, especially when you know they may be ready to sell everything. Your performance reporting system should help you demonstrate to clients that their long-term investment performance and current asset allocation models are on track. You should be able to easily access your clients’ specific performance returns and their true financial net worth. In fact, many advisors now give their clients direct access to this information. This helps them understand their true position instead of what they might believe it is by simply watching CNBC.

Advisors’ relationships with clients frequently begin by developing a comprehensive financial plan and overall risk tolerance for the client. There are multiple solutions available that assist with this work, such as MoneyGuidePro, eMoney, Finance Logix or Riskalyze, just to name a few. The information from those systems usually directly influences the specific investment recommendations for the client’s portfolio. When periods of market volatility occur, it is a good time to revisit the client’s financial plan and risk tolerance.

Going over those starting points with your clients provides another opportunity to expand their viewpoint beyond the day-to-day market fluctuations. Your financial planning system can help facilitate this conversation, particularly as you adjust certain data inputs based on your client’s current information. You might even learn that the client’s risk tolerance, goals, income or cash needs have changed since the last time you reviewed their financial plan.

Dealing with volatile markets involves evaluating portfolio rebalancing opportunities. Whether you use your custodian’s rebalancing system or your own customized solution, your rebalancing system can dramatically reduce the time and effort involved with these activities. Don’t hesitate to let your clients know how you utilize these systems to make more informed trading decisions. It is a very positive message to convey to your clients: that their advisor is able to efficiently evaluate their portfolio and make timely trading decisions.

In some respects, volatile markets are a perfect opportunity to reaffirm your value proposition to clients. Volatile markets elicit lots of opinions and predictions from the media and other professionals, even your clients’ neighbors! With all that noise, don’t overlook how you technology can assist you in communicating with and serving your clients during these types of environments.

Don’t Kid Yourself — Your Clients Are Paying Attention

Sometimes it is easy to believe that your clients are not influenced by large short-term market moves; that they understand they are invested for the long term and aren’t worried about short-term distractions. This might be true to a certain degree, however, they are undoubtedly still paying attention. This is why most custodians, reporting systems and financial portals experience an increase in client logins during volatile markets. So be proactive with your communications. It is well-worth your time and effort, even if your clients don’t display obvious signs of concern.

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