Stock Market_Down

Bad markets are challenging for all advisors. But for younger advisors who may not have long relationships or established reputations to fall back on, these times can be particularly difficult.  If you focus on clients and provide them with a plan to achieve their goals, then bad markets can be a huge opportunity to strengthen your existing relationships — and even develop new ones.

Here are 3 steps to follow.

1. Focus on goals

When markets are poor, client reactions can range from indifferent to outright anger or sadness. Identifying your client’s ability to handle volatility is very important.

To do this, focus on a client’s goals and the progress he’s making to achieve those goals, instead of his rate of return. This way, your client will be less emotionally sensitive to the volatility of the markets.

Read: Are low oil prices here to stay?

We recently spoke with a retired couple who was concerned the recent downturn in markets meant they had lost a lot of money. Our first step in responding to their concerns was to focus on their long-term retirement projections. Based on a quick review, we were able to show them that the recent downturn had very little effect on their ability to achieve their goals. The clients left our office feeling reassured, and didn’t make any rash decisions with their portfolio.

2. Be cautious with portfolios

We tend to err on the side of caution with all our portfolios. We go through an in-depth discussion with new clients to get a good appreciation for their ability to handle risk and volatility. Then, we’ll design a portfolio with the minimum amount of risk possible that will still allow them to achieve their goals and meet their expectations. For example, in 2015 we’ve been allocating an equal weighting to international equities and Canadian equities. This helped diversify our clients’ portfolios and protect their capital last year.

3. Communicate with clients

The best thing you can do is be proactive with your communication during periods of poor market performance. Be consistent, but you don’t have to be frequent in your communication. If you’re emailing your clients every day about what went on in the market, you’ll send the wrong message and may even scare them.

Read: Volatility isn’t changing the way clients invest

In January, we sent out one communication to talk about the volatility in markets and how we were addressing it.  We acknowledged that markets had been volatile and communicated what positive steps we’d taken to work through the problem. We also refocused the discussion on clients’ long-term goals.  In addition, we sent follow-up messages and called many of our top clients. Based on our proactive communication, we’ve had very few calls from clients who are concerned about their portfolio.

Read: Red flags for equity investors

So, if you can tap into a client’s emotional concerns and address his goals and fears, you’ll be more likely to retain him. And this process can also help you sign new clients.

Craig White and Grant White are investment advisors at Craig & Grant White Family Wealth Management Group, National Bank Financial.
Originally published on
Add a comment

Have your say on this topic! Comments are moderated and may be edited or removed by
site admin as per our Comment Policy. Thanks!