The right way to reassure clients (and it will get you referrals)

There are good ways and bad ways to try to reassure clients as we all grapple with the onset of the bear market. You can share economic statistics. Tell clients to keep calm. You can compare this market to previous markets. You can put together a PowerPoint slide deck and walk them through a market analysis. Those would be some of the bad ways.

Much of the inspiration for this post came from a recent post by Julie Littlechild where she talks with Bob Veres about what to communicate to your clients. It’s a good conversation and worth reviewing. You can find it here:

I will summarize a couple thoughts and also talk about the opportunity to build your business.

Client fears are being triggered by the decline in the market but, of course, only the superficial concern is about investments. The actual fear arises from something deeper. Farther down than the rational parts of the brain. Down in the part of the brain that drives everyone to buy toilet paper.

People are struggling with the feelings that arise from that part of the brain that thinks the world is going to end, the part that is triggering everyone’s fight or flight response. People are not just looking for a rational explanation of what’s going on and what might come. They are struggling with fear. And the greatest service you can provide to them is to help them deal with it. Here are couple tips that may help.

Ask, don’t tell. It is unproductive to tell people how they should feel. Like dealing with an angry child or a despondent widower, trying to talk them out of their feelings may not be helpful. Their feelings are what they are. Instead, ask them what’s on their mind. Permit them to talk it out.

Empathize. Acknowledge what they are going through. That the experience is valid even if the outcomes they dread are unlikely. Help them feel understood.

Clarify. Talk about what’s behind the fear. It may help to focus on the plan rather than the portfolio. The number on the statement is not as important as the goal – what they wanted it to provide for them, in retirement, for example. Even with the downmarket, will they still have enough income to do what they want to do? How far off are they?

Reinforce your commitment. Let them know you have a strategy. You will stick with them and will have suggestions as conditions change. Assuming you have been in the business a while, you have seen this kind of scenario and will get through it together, as you have in the past.

Empower them. Remind them there are things that they can do or you can do together. If their plan is compromised, they can make some decisions on changes in spending temporarily. Maybe even shift some spending into saving for now. The point is they can take action in a positive direction.

Keep in mind this is a good time for your business. How you act now has a big effect on client loyalty. The guidance you provide during difficult times is more valuable (and more appreciated) than what you do during good times. No one says “we are so grateful you were there to help us get through the bull market.”

It’s a good time to plant referral seeds. Consider making an offer like this at the end of a call or meeting: if you have any friends who are nervous and do not have an advisor or whose advisor is not reaching out to them, feel free to have them give me a call. I’m happy to give them 15 or 20 minutes to help answer their questions, no obligation because they are a friend of yours.

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