One of the joys of volatile markets is that you can actually remember the lessons of the last big downturn, because it was not that long ago.
The market has now fallen enough that we are referring to certain dates in 2008 in the statistics overviews. That bear market, the second “once-in-a-lifetime” decline in ten years, took a tremendous toll on advisors and clients alike. And the advisors who managed to keep their clients to stick with long-term investment principles did the best by their clients, and earned more than their fees.
One of the significant ideas to arise from that difficult time was the importance of doing as much asking as telling. This is anecdotal and unscientific but significant observation – the advisors who invested their time telling their clients to hang on fared worse than the ones who asked their clients about their concerns.
I remember talking with an advisor who engaged his advisory board in designing the best way to address clients’ concerns about the down market. They came up with the idea to do “town hall” meetings, each with a brief presentation and lots of time for questions and answers. The meetings were a huge hit.
I remember Bob Curtis, CEO of PIE Technologies (who produces MoneyGuide Pro) showing advisors how to communicate the effect of the downturn on clients’ plans rather than their portfolios, and pointing out that the real question on their minds was not “How far will this go?” but “Will I be eating dog food in retirement?”