The challenge.
During difficult and challenging times, advisors and agents face a particularly unique challenge in that in addition to doing their normal job and playing their normal role, which is to advise and counsel their clients, they’re expected to absorb the emotional reaction of their clients to the current challenge or crisis which is usually out of everyone’s control. Many advisors and agents are simply not trained or equipped to deal with this role. When confronted with questions about what is happening and what should be done, advisors and agents can become defensive, reactive, and emotional themselves. This article will help advisors and agents learn to take a “High Altitude View” of the situation and see the current crisis or challenge as an opportunity to provide leadership and deepen their client relations while reinforcing their value in the eyes of their clients. There are 5 areas of focus:
Focus number 1: Meet them where they are. The most important thing is to check in with the client with the primary goal of listening. It’s very important that the client knows that they are being heard. It’s best not to call a client to tell them what is happening or to tell them your opinion or to recant something that you read about what may or may not happen. Your primary purpose in checking in with the client is to get a read on where they are and to listen. Acknowledge their fear and feelings. One way to make sure that the client knows that they are being heard is for you to listen intently, take notes, and then to repeat back to them what you heard. This is called acknowledging. “I heard you; this is what you said”. By repeating back to them, almost verbatim what they said, it confirms with the client that you really are listening and that you really heard them. Validate their reaction to what’s happening. In addition to acknowledging their fear and their feelings, it’s important that you validate those feelings and fears by letting them know that they are not alone in feeling this way. You may even confess that you yourself have felt fear and uncertainty. It’s normal. It’s a normal human reaction and the more that they know that what they’re feeling is normal and acceptable, the more that they will feel comfortable that they’re not alone and that you are in the situation with them.
Focus Number 2:  Deliver Value. How do you deliver value during a crisis or in challenging times? Provide Leadership. What is leadership in this context? Leadership is providing perspective and direction. Let’s talk about perspective first. Perspective is letting the client know what is happening, why it’s happening, and how it will affect them. It’s sorting through all the things that they’re hearing, all the rumors, all the differing viewpoints that they may be listening to or reading about and bringing it into the focus with facts and helping them to stay above the fray. It’s helping them to understand exactly what is happening, exactly why it’s happening, and exactly how it will affect them. By bringing this perspective to the client you will demonstrate to them, in a leadership mode, that you are on top of the situation. Next lets talk about direction; Direction is another element of leadership. Telling clients what they should be doing at this time, given everything that you know about the situation, and everything that you know about their goals, is another form of leadership. It’s giving them direction, telling them what to do and how to do it. Reinforce Your Relationship. Another way to deliver value is through reinforcing your Relationship with your client. Relationships are very important, if not crucial at this time. Many relationships are strained during crisis situations and challenging times. It’s important to remind the client of your shared values. Values are so important in connecting people and bringing people together and it’s the fabric that binds your relationships together.
Also, remind the client of the History that you have together; the things that you’ve already been through, the good results that you’ve had over time together. This will help to deepen your relationship. What happens when you remind your clients of your common history, your Performance – not in the terms of investment performance – but in terms of you showing up, being consistent, being honest, having integrity, reminds the client of why they hired you as their advisor to begin with. This deepens the relationship, especially in challenging times and times of crisis. Bring the Creativity. The third way to deliver value in this situation is by demonstrating your Creativity. One of the best ways to do this is by reframing the crisis as an opportunity. For instance, if you’re in the investment business this may be a once in a lifetime opportunity for the client to buy low into what has been a very accelerated stock market. Use your creativity to propose tactics that could be employed so that the client can actually take advantage of the situation in order to maximize the opportunity. An example might be to propose tax-loss harvesting. In other words, selling some of their investments to realize tax losses and then immediately buying back the investment so the client can participate in the gains of the recovery while having booked these tax losses which have the effect of reducing their tax liability in future years. The bottom line is that its crucial to deliver, and to continue to articulate, your value during crisis or challenging times through leadership, relationship, and creativity.
Focus Number 3:  Redirect the client’s focus to what can be controlled and away from what cannot be controlled. What can be controlled? In the investment arena, there are 4 things that can be controlled. Costs can be controlled. You can continue to look for low cost investments and low cost opportunities. Taxes can be controlled. This could be a good opportunity to employ tax loss harvesting, or to sell investments that maybe have been under performing, and to do so without actually realizing a taxable event. Additionally, gifting of low basis stocks could be advantageous during times of market decline. Risks can be controlled. Hopefully, in the investment arena, the risks have been controlled through diversification, dollar cost averaging, rebalancing of the portfolio. Many investment platforms have automatic rebalancing built into the portfolio. This is a way of managing risk. Ideally, a client’s portfolio should be positioned so that they can ride out any investment decline or any market correction, which are inevitable. If not, this can be a goal for future conversations. But risk can be controlled. The fourth thing that can be controlled is Behavior. You can control, or at least influence, your client’s behavior. It’s a well-known fact that most of your client’s tendencies are to sell when it’s low out of fear and to wait until things seem safe and buy high into investments. The number one thing that you can do for clients is to remind them that their behavior is a major determinant towards how their portfolio performs over time. So, by discussing what can be controlled, you are bringing some peace of mind and some sense of control to the client and that further demonstrates your value. You can control costs, you can control taxes, you can control risks, and you can control behavior.
What cannot be controlled? You cannot control Performance. No matter how much you get measured by it, no matter how much you like to talk about it or how much you don’t like to talk about performance, there are so many external actions that affect performance over which you have no control whatsoever. For instance, we have no control over how the Fed responds to a market crisis. We have no control over the currency policies of other countries. We have no control over viruses or acts of war. So it’s important to remind your client that this is not the place to focus. Remember, if we control what we can control – costs, taxes, risks, and behavior – then performance will take care of itself over time.
Focus Number 4:  Remind the client of their WHY. During challenging times or times of crisis, involve your client in the process of remembering what their long term goals are and why they even set up an investment program or financial plan with you to start with. Remind them of their high-level financial planning goals to retire at some point, to educate their children, to buy a second home. By refocusing the client on their WHY, you will help them to understand and remember why it’s so important to ride out the current challenge or crisis.
Focus Number 5:  Articulate your Beliefs and demonstrate your Faith. Belief. Your clients should know your Beliefs. Your belief around asset allocation, and risk management. Your belief in dollar cost averaging and not trying to time the market. An example of a belief is; I believe in “Time in the market versus timing the market”. Own your beliefs and communicate them often. Especially during times of crisis, we do not abandon our beliefs. When your clients see that you are firm in your belief system, they will be inclined to follow you. Faith. A brief discussion of Faith could be helpful. I’m not talking about faith in the sense of religion or spirituality necessarily. I’m talking about faith as in a true belief and confidence that in the end everything will work out for the best. In times of crisis, our faith and our beliefs are often challenged, and this is the precise time when we rely most on our faith and our beliefs as our safety net. It’s certainly not the time to abandon your beliefs. Holding on to your beliefs in the face of crisis is the very definition of faith.
Conclusion. Crisis brings opportunity. Even when fear is palpable, following the steps I’ve outlined  is crucial to not only preserving your client relationships, but also in demonstrating your true value to your clients when it matters the most. Remembering at all times that you are a leader to your clients will pay dividends in the years to come. How you behave and perform during crisis events and challenging times will do more to elevate you and your firm than any marketing program or portfolio performance will ever do. Yes, it’s scary and it’s not easy. But the sooner that you learn to adopt and implement the skills and mindsets  discussed here, the stronger and the more confident you will become as an advisor, and the more solid and deep the relationships you have with your clients will become.