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.”