These days, advisors need all the communication tools they can find.
Long-time planner Kyra Hollowell Morris has started holding regular group bagel breakfasts for clients-a Saturday morning get together that allows both planner and investors to shoot from the hip when it comes to opportunities and concerns.
"We started out with five people the weekend after 9/11 and just had about 40 attend a few weeks ago. They appreciate the opportunity to support each other," Morris says. "They really want to know that we're doing all we can, that there is light at the end of the tunnel, even if it's not immediate, and that they're not missing anything. My message is, I want them to keep doing what they should do, but we explore all the other possibilities," says the planner, president of Morris Financial Concepts in Mt. Pleasant, S.C.
As more planners nationwide are learning, knowing what to say to clients and how to say it at this crucial time is no easy matter. With three years of negative returns eating away at investors' portfolios and the war in Iraq happening in vivid real time, the stock market's continued volatility and the lack of clear-cut alternatives has been frightening. What to buy, what to hold and when to fold has been every advisor's most pressing strategic challenge. Turning their response to the challenge into a steady, consistent and heartening message for clients is every bit as critical.
Ask yourself this: Do your clients really know you're doing everything you can to preserve their wealth? Do they know where and how you're adding value to their financial and investment plans? Do they know that the stock market will turn around, just as surely as it crashed, even if no one can say exactly when?
As you'll see, some of our advisors use common sense and straightforward dialogue to illustrate these points. Others use historical market performance and relevant data. Still others take their cue from clients themselves. And some advisors use everything they can get their hands on to ensure that clients know the firm they employ is working hard for them. Here are the methods and messages advisors across the country are delivering to their worn and weary clients.
Put It In Context
Allowing clients to try to figure out what's happening to their portfolio without the context of stock market history is unfair at this time. How bad are things really? Are they as bad as they might get? Are they better than you, the planner, told clients, they might get?
It's a great time to remind clients that stock market history is actually on their side when it comes to booms and busts. "We're using data that shows that there has been only one time in the last 100 years where we had negative returns four years in a row (during the Great Depression the market was down 1929-1932)," says Bellevue, Wash.-based advisor Michael W. Boone, president of M. W. Boone & Associates. "It lets people know that this is an extremely rare occurrence for markets to be down this amount of time."
The advisor also uses charts and graphs, for instance, to show that if Nasdaq regains its high of 5000, investors will earn average annual returns of near double digits-even if it takes well over a decade to fully rebound. "I think it's important to get clients' focus off today's news and back onto the fact that their investment horizon is 10, 20 or even 30 years," says Boone. "I'm also pointing out that they're actually buying at 1997 prices."
Still, Boone admits that it is a constant uphill battle to keep clients focused on the future. When he asks them which is a riskier proposition, buying stocks in 1999 (before the bust) or now, they invariably tell him: "Now." "It's crucial," he adds, "that we continue to explain that it's much better to buy in a valley than at the peak, so it doesn't take them a decade or more to recoup potential losses. We definitely have investors trying to do the worst thing at the worst time. It's as true today as it was in 1999."
If You Add Value, Shout It From The Rooftops
There's enough bad news to go around. Don't be afraid to tout the good news, too. Especially when your firm is responsible.