Advisors cannot put their heads in the sand. A market slowdown is inevitable. We might not know exactly when, but history has proven we cannot escape recessions. The problem is, that when things are going well, most advisor do not prepare for the worst. While they might prepare their clients, they do not prepare their businesses.

The Good News (And The Bad News)

When a recession hits, that can be the best time to gain new clients. Wealthy individuals and families can lose faith in their current relationship and be open to moving their assets to someone else. Plus, those that do not have an existing financial advisor often realize that they should not be watching over their wealth on their own, especially in periods of turmoil.

So, the potential exists to lose business, but also the potential exists to win new clients. First, focus on retention. Make sure the house is in order before looking for outside growth. It is easier to keep a client than win a new one. With that said, although during uneasy market performance advisors are their busiest, this is when they should be extremely active with their new business activities.

Here are a handful of helpful tips from a dozen advisors that have been successful at keeping and growing their businesses in down markets:

Prepare Clients For Declines

“70+% of new business comes from referrals so have to have happy clients.  Keeping clients happy is about proactive communication and managing their expectations.  We’re up front and often telling them ‘your portfolio with its 60 percent equity allocation, in the last two significant market declines, lost more than 30 percent of its value…and this will likely happen again at some point.’  When they lose 20 percent, they think we’re really smart while their friends (with a similar mix) might think their advisor isn’t very good.  If an advisor’s value proposition is some rate-of-return number and not holistic financial planning, they’ll probably lose clients when their strategy is out-of-favor in any economic environment.”

—Gary Vawter, owner and senior advisor at Vawter Financial

Keep Clients Happy

“Severe market downturns are never easy for clients, and it’s typically when the strongest advisors do their best work and are needed most. Advisors who haven’t done the planning work necessary to understand the client’s long-term goals, who don’t meet with their clients on a regular basis, and don’t communicate well end up with unhappy clients who are looking for more. Good advisors tend to get more clients referred to them because of this. In addition, some of the prospective clients you already know reassess their relationships and reach out for a second opinion.”

—Sammy Azzouz, president at Heritage Financial Services LLC

Communicate Proactively

“We are making sure we deliver value and expertise to them every day. If there are outside assets it is a perfect opportunity to increase AUM. We find an increase in referral business during times of recession because of our proactive communication. No advisor enjoys calling with bad news when a portfolio declines but beware if you don’t because your client will be looking for a new advisor who will be more attentive.”

—Jane Ricardi, Certified Financial Planner Professional at North Light Financial Services

Hold The Client’s Hand And Be Accessible

“Staying the course in a recession is not for the weak of heart and is particularly stressful for the unsophisticated investor.  We proactively contact our clients in all market conditions but increase our contact when the market is rocky.  Many of our clients are going it alone for the first time (either through divorce or death) and are frightened.  We try and educate them and explain to them that unless they insist on going to cash all losses are paper losses.  In addition, the phones patch over to my cell phone when the office is closed so we’re always available in the event of a panic attack.”

—Barbara Shapiro, president of HMS Financial Group

Prospect Before The Bear Market Starts

“The process of convincing investors to become clients in a recession actually starts during bull markets. When the stock and bond markets are rising, it’s easy for consumers to think that investing is easy. So we focus on consumer education, and devote lots of effort to helping them understand that bull markets don’t last forever, and that diversified portfolios are important. This advice is often ignored while prices are rising, but when the recession hits and investors start incurring substantial losses, they realize that our advice was right all along—and it motivates them to contact us. Advisors who promote high returns during bull markets aren’t of interest to investors during down markets, which is why our approach helps set us apart.”

—Ric Edelman, founder and chairman, financial education and client experience, Edelman Financial Engines

Diversify And Don’t Chase Returns

“Recessions are typically a time of dislocation, causing people to reassess their financial situation. Providing a diversified portfolio that doesn’t chase returns and offering sound financial planning advice gives potential clients a comfort level that can be shaken in a market downturn. When markets rise, people tend to be complacent. Recessions are a great opportunity.”

—Bruce Wiener, financial advisor, Wiener Financial Management

Consolidate Existing Client Assets and Get Referrals

“Market downturns often lead investors to make emotional decision errors. It’s during turbulent times when having a trusted advisor really adds value to investors.  We’ve been successful in the past by winning new clients during market downturns by asking for referrals and suggesting clients consolidate their assets.

We spend considerable time preparing for downturns by managing risk and setting expectations with clients during good times. Then, when a shock rattles markets, our clients are less likely to overreact and change course without a plan. This is an opportunistic time to ask clients who are happy with how we are able to navigate volatility for referrals. At times of market stress, many of our best clients are happy to recommend our services to a friend or relative who may be feeling the pain and stress of a market downturn.

Market downturns also reveal the value of risk management across all assets.  We’ve run across many examples of clients who are surprised at the risk their overall portfolio. It’s difficult for clients to know their true risk, if their assets are spread around multiple managers, strategies and accounts. Many clients are unaware that they are taking unnecessary and often unintentional risk. We offer to complete a risk assessment of all their assets, and this leads to opportunities to for new assets.”

—Stephen Tuttle, Partner, chief investment strategist and chief compliance officer at Signet Financial Management, LLC

Be Even More Visible When Others Are Hiding

“Recessions create fear and uncertainty for people and that’s when they are more likely to seek to make changes. When we are in good times, people get complacent and tolerate the status quo. When other advisors put their heads under their desk we stay visible. We make sure we show up at community events and fundraisers. We network with centers of influence and provide them with tools to educate their clients. We communicate even more in uncertain times through our newsletter, blog, social media and newspaper column. We address a variety of topics around the long view of investing, the importance of having a sound financial plan and sticking to it and around behavioral finance that helps people keep their psychology in the right frame of mind.”

—Paula Harris, co-owner and principal at WH Cornerstone Investments

Use Marketing To Let The Prospects Hear Advice

“We would spend some time talking about the subject and what to do about it on the marketing we already do. Two radio shows, my biweekly articles and my newly established Monthly Musing to Clients and Prospects.

The discussions would be varied and come from many different perspectives but the focus would be what to do and not do and how to survive from a planning and investment perspective.

During the 2000 to 2002 mess I opened up ‘World Optimism Headquarters’ on the Radio Show and beat the subject to death for two long years.

During good times we tell people not to be stupid and greedy. During bad times we tell the world is going to get better and deal with it.  Handholding, hugs, dope slaps.  Whatever is necessary.”

—Mike McNamara, founder and financial planner at McNamara Financial Services Inc.

Double Marketing Efforts

“A market downturn is an excellent opportunity to gain new clients.  When times are turbulent the tendency is to hide or to hunker down but what we should do is double up our marketing efforts. This is when people are looking for advice and aren’t hearing from their current advisor. As tough as 2008 was we were able to capture new clients because we reached out to clients and even though things were difficult there was a void of leadership.  We called more, had events and didn’t shy away from tough conversations. It’s been a long time since people have experienced a serious down turn so when it happens it will probably be even more dramatic and upsetting to people.”

—Wade Chessman, president and wealth advisor at Chessman Wealth Strategies

Be Out In Front Of It

“Stick to fundamentals—blocking and tackling in football, or marketing and servicing in financial planning and portfolio management. There are untold possible ways to reach new clients—broad brush advertising for the long-term name recognition, seminars, radio, television, and print media exposure, social media outreach, or referrals from other professionals and best of all from clients. Whatever your chosen path of marketing and outreach for new clients, don't slow down due to market downturns and prospective reductions in revenues.

Deep declines in difficult markets can initially create a sense of analysis paralysis where investors are hesitant to make a change in advisors. They sometimes want to wait for some of the rebound before making changes. Being planning focused for broader context is helpful to clients in times of turbulence and for your existing clients help them to be more willing to stay the course.  Be out front and a resource for both clients and future clients, which will position best to keep existing clients and add new business soon.

We're focusing on increasing our outreach to centers of influence who may be best suited to send us qualified prospects and to whom we are a known quantity with whom they can feel confident sending their client relationships. We are spending some money on seminars, our radio program, and getting in a position to look for acquisitions in troubled times ahead. All that said, the best thing you can do to attract new clients in good times or bad is to create and deliver an outstanding client experience. The better job you do for your existing clients will create good word of mouth which will lead to tomorrow's new clients.”

—J. Christopher Boyd, founder and chief investment officer at Asset Management Resources LLC

Prospect Individuals And Retirement Plan Sponsors

“The ongoing success of our business is based on our ability to provide exceptional service and value to our clients, while still dedicating time and resources to finding new business. While it may seem counterintuitive, an economic downturn can actually provide additional opportunities to attract new clients. A recession or downturn is an occasion for clients to reflect on the service and products they are currently being offered.  In many instances these potential clients have not fully vetted their current providers because they were riding an bull market.

By proactively interacting with clients and potential clients during a downturn and re-enforcing your value proposition, you may find additional opportunities.  For example, one could prospect Retirement Plan Sponsors as to whether they have recently evaluated their plan fees and investment performance, as a downturn may remind them of their fiduciary duties and spur them to action.”

—Matthew Gallagher, partner and head of business development at TrinityPoint Wealth

Although they might not agree on when this will happen, industry experts believe a down market will come, whether we like it or not. Knowing that, be prepared to answer the questions… What can your business do to be prepared to prosper from the opportunities a recession creates?!

Mike Byrnes is a national speaker and owner of Byrnes Consulting,LLC. His firm provides consulting services to help advisors become even more successful. Need help with business planning, marketing strategy, business development, client service and management effectiveness? Read more at ByrnesConsulting.com and follow @ByrnesConsultin.