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Three Ways to Retain Clients During a Crisis

Written by: David Lovell | Swan Global Investments

Tips for Strengthening Client Relationships

At the start of 2020, it would have been very difficult to predict that we would be in the market environment we find ourselves now – facing a pandemic of a novel virus, unprecedented volatility, record unemployment and a long road of uncertainty ahead. The S&P 500 Index suffered its fastest decline of 30%, dropping 34% from peak to trough in a matter of weeks. Ten years of job growth were wiped out in just 28 days.

Undoubtedly, this is a difficult time for many businesses of all sizes and in all sectors, and the path ahead is not entirely clear. However, financial advisors should view market crises as an opportunity to showcase their value to their clients.

Financial Advisors now need to shift their focus to retaining clients through proactive and consistent communication, providing actionable advice, and effectively managing risk. How financial advisors respond to a crisis and guide their clients through a time of extreme uncertainty can make or break their business.

1. Communication is Key

Proactive Communication

Financial Advisors can improve client retention during periods of market crisis with proactive, rather than reactive, communication. Don’t wait for your clients to call you. At the outset of any potential crises, advisors should reach out to clients through e-mail to notify them that the advisor is keeping an eye on the situation and reassure them that protecting their irreplaceable capital is a priority.

Communicate Often

In addition to reaching out to clients proactively, advisors should strive to become more connected to their clients with consistent communication to ensure they feel informed and secure:

  • Send regular emails, such as newsletters with helpful insights and outlooks
  • Schedule virtual check-ins, or calls with clients who need regular touches
  • Utilize social media to share information, updates, and insights to stay top of mind
  • Provide relevant and timely updates to your website

Communicate with Purpose

With almost everyone staying home, now is a great time to host virtual events to connect with and educate clients. Consider holding virtual webinars to

  • Unpack the crisis and discuss recommendations for protecting capital
  • Present on personal finance topics related to challenges clients may be facing
  • Set up weekly virtual “coffee chats” to educate on a topic or inform with market updates

Many of these video conferencing platforms allow participants to ask questions during webinars, adding another valuable touchpoint between advisors and their clients.

2. Be the Voice of Reason

When major market events occur, clients are susceptible to getting wrapped up in a myriad of news headlines and tweets. Seeing rumors or half-truths could lead clients to panic and act emotionally, ultimately causing them to take money out of the market to avoid “losing.”

During market crises, it is important for advisors to be the “voice of reason” to help their clients avoid making irrational, emotional investment decisions.. With consistent communication, you can effectively provide reassurance and guidance.

Emotional investing could lead to a significant derailment of an investors’ goals. When a client sees a negative news headline or tweet, advisors need to be there to be the “steady hand” and work with their clients who express concerns. These clients need to be reassured that focusing on the long-term rather than day-to-day market moves will bring them closer to achieving their financial goals.

Consider incorporating behavioral finance topics and reminders in your communication efforts to keep these concepts and lessons top of mind. Encourage clients to reach out when they feel anxious about their financial plans and to talk through their concerns. Leverage easy-to-use services, like Calendly, Acuity or other scheduling services to avail yourself and streamline appointment request and confirmation.

3. Effectively Manage Risk to Protect Clients’ Irreplaceable Capital

Finally, the speed of this global black swan event reminded everyone how market risk can quickly and significantly impact portfolios, and  that risk must be effectively assessed and managed regardless of market environment.

Clients want to know now more than ever what you are doing to help prepare them for the uncertainty ahead.

Consider implementing strategies that mitigate risk and protect clients’ irreplaceable capital. Hedged global equity or options-based strategies, which are at the core of Swan’s Defined Risk Strategy (DRS), have helped investors navigate and capitalize on the last two bear markets by hedging risk while producing consistent returns through full market cycles.

Managing Risk in a Redefined Advisory Landscape

Advisors are fiduciaries living in a litigious world and tackling a daunting investment environment. Simply maximizing return and limiting costs is not enough and can be problematic. Those advisors that help investors understand the benefits of optimizing risk-adjusted return in a low-yield world, while focusing on a goals-based approach, will be better positioned to not only meet the heightened fiduciary standards but also to compete and succeed in a competitive wealth management and financial planning marketplace.

Telling clients to “just ride it out” may no longer get the job done. It is important for advisors to instill confidence in their clients by giving them actionable advice and do so more effectively using digital communication. Reminding clients they have a plan is important, but it may be more important to ensure the plan is leveraging effective risk-managed investment solutions to help investors stick to their plan.

In these uncertain times, with many being forced to work from home and reconfigure their businesses, it may be the most difficult time to be an advisor. But your services are priceless during such times and offer you the greatest opportunity to demonstrate your value. Financial Advisors who take advantage of the opportunity stand to prosper for themselves and for their clients. 

Related: The Need for Risk Mitigation