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Advisors: Be the Leader You Are Being Paid to Be

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Wahooo, a Lousy, Volatile and Crazy Market!

Alas, the Bull Run has yawned and 2016 has presented us with a volatile roller-coaster ride that is proving to be unnerving to millions of investors around the globe. I say Hooray!!  No, I’m not a masochist or a pessimist, but I am an optimistic opportunist.  This is the perfect time to show your leadership prowess with your clients and many of your prospects. Some advisors only know how to shine when the markets are rocking and rolling. We say, ‘Don’t confuse brains with a bull market’! Embrace the volatility and find reasons to reach out to your top twenty percent of clients at least. But if you have the time, reach deeper into your book of business and contact as many clients as you can. Clients want to know what’s going on, IF you know what’s going on and more importantly if you really care about them. Now is your time to go above and beyond what most advisors do during these times. Rise and Shine!

Remember the wild stock market in the late 1990s?

Think back to the crazy markets in the 1990s. The DJIA increased dramatically during the 1990s. The DJIA hit 1,000 for the first time in 1972. It took 15 years to double to 2000 by 1987. On the first day of the 1990s, it hit 2,800. It hit 10,000 in March 1999, more than tripling in just over 9 years. This is because people invested heavily in the stock market during the 1990s. The DJIA hit a peak of 11,722 in January 2000 and the two words we heard plenty about were irrational exuberance. For the trailing twelve months from March 1999 to March 2000, there were over 250 mutual funds with returns of over 100%.  Yes, you read that right. Tech stock returns were astronomical and it looked like there was no end to these insane returns. Imagine all the financial advisors hired in the middle years of the 1990s. They learned and believed that the stock market just keeps going up and up and every stock or fund they chose for their client was a winner. Even monkeys throwing darts at a Wall St. Journal could pick winning stocks. Yes, that was an actual article in the WSJ. Clients told their advisors that they didn’t want to own bonds in their portfolios anymore. They suggested five HOT stocks they wanted because their barber or mechanic made a killing on them and they wanted similar returns. Asset allocation models that averaged ten to twelve percent annually over the last forty years lacked any luster compared to 100% returns in twelve months. Investing in the stock market was a great big party and everyone was making more money than they could imagine! That is, until the bottom fell out and stock values plummeted and the financial world fell apart. Many stocks dropped 99% in value and the shock waves made millions of people tense and feeling broke to say the least. When I saw the stock market collapse and investors freaking out, I knew I had to take action and help my financial advisor clients with a strategy to calm the nerves of their clients. Advisors needed to take action also and do a lot of handholding during volatile markets like these. The 1990s provided one heck of a party for investors, but the hangover that started in 2000 was sickening. The best advisors in our industry went to work and reached out to as many clients as they could possibly reach. Other advisors panicked and went into hiding, avoiding the frantic calls from their clients.

You’ve got to be proactive

I spoke to a very large audience of wirehouse advisors in 2000, immediately after the dot-com bubble burst in the first quarter.

At this meeting, I urged the advisors to get on the phone and meet with clients face to face to explain what just happened and what to do next.  Several young advisors raised their hand to comment. “My clients will kill me if I call them. Their portfolio is down fifty to eighty percent and they are devastated.”  I took a long breath, looked them straight in the eye and calmly explained that if they don’t call them, they will lose them as clients forever. We earn their confidence during the tough times, not during the raging Bull markets. This is when strong relationships are forged. This is also when clients fire their advisor for a lack of communication and concern. I urge you to pick up the phone and call as many clients as you can. Be proactive. Don’t wait for them to call you. Be the leader you are being paid to be.

How to make volatility your ally

Your best course of action right now, during this volatile period is to reach out, schedule a face-to-face meeting with your clients and put them at ease. The advisors who did this in 2000 and 2008 solidified their relationships, proved their competence and commitment to their clients and subsequently gained dozens of great referrals. This is the time you act like a pilot on a jet that’s taking passengers from Boston to Hong Kong. It’s a long ride and there will likely be volatility, but if you communicate with them along the way, you will provide leadership, confidence and direction. In most cases, that’s all they need to reassure them that you are their go-to person. Ask them if their financial goals have changed. Since stocks just went on a massive sale, ask if them if they would like to buy more while the prices are lower than last quarter. Ask what you can do to put them at ease. Then just listen. That’s one of the best skills of a seasoned and successful financial advisor or anyone in sales. We ask questions and then we listen intently and make sure we are completely present and listening attentively. I know many of you know this already, but it’s surprising how many advisors don’t practice this. Listening is one of the most important actions you can do right now. Let them vent, raise their concerns, express their worries and tell you what they are hearing from the neighbors and the talking heads on TV. Seek first to understand and then to be understood. I thank Stephen Covey for that quote of course.

Create Raving Fans During Volatility

When the markets turn into positive territory, your clients will remember that you were there for them during the volatile times. During a future review, you can mention the beginning of 2016 and how nervous people were. You can show how you and your clients took advantage of the ‘sale’ and used it to add to their portfolio.  They will appreciate your leadership role and how you listened to their concerns. That’s a perfect time to ask them a sincere question.  “Do you know anyone else I can help like I’ve helped you with your retirement portfolio?”  If you’ve done a great job during these volatile times, they will quite often personally introduce you to their wealthy friends who just fired their advisor.  We all know that volatility is just part of the investment world. We don’t get big ‘sales events’ like this very often, but when we do, run with it! Just remember to keep in touch with your clients and prospects during these times and you will be one of the best producers in our industry. Remember, you can reach all the goals you have in your life if you help enough other people reach their goals. It’s a Win-Win relationship. If you do this now, you may find more clients raving about you and giving you more money. 

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