Dr. Bill Lloyd has a way of calming anxious patients when they are in an examining room awaiting surgery.
“I just pull out an anatomy book and show them this is where we are, this is what we are going to do, this is how we are going to make things better and this is why you need to get better,” he explained.
And Dr. Lloyd, a pathologist and the health director at Transamerica, is urging financial advisors to use a similar tactic to calm the fears of clients who are concerned about the impact of COVID-19 on their finances.
Dr. Lloyd spoke Wednesday during a webcast titled, “Making Sense of COVID-19: Current Evidence and Best Practices,” sponsored by TD Ameritrade. The session was designed to help advisors gain a better understanding of the COVID-19 outbreak; how they can protect themselves, manage anxiety and fear at their firms; and how to have productive conversations with clients.
He pointed out that Transamerica has prepared two one-page tools that will allow advisors to approach anxious clients the way he does anxious patients. The tools, he said, explain what’s going on in the market now and compares it to what happened decades ago. One document speaks to equity and the other talks about bonds, he said, noting that the tools go back to 1980 and show the performance of the stock market and market performance through sickness and health during various global epidemics such as AIDS, SARS, dengue fever, and West Nile fever.
“At the six-months mark after every global epidemic since 1980, the market always comes back. True for stocks, true for bonds,” he said. “This is a powerful tool that you can use to educate your clients, help them dial down that anxiety and help them look forward to a prosperous future,” he said, adding that advisors should also use the tools to help clients understand that time is on their side.
Dr. Lloyd noted that SARS, which began in late winter of 2002 and lasted into the beginning of 2003, was a deadlier coronavirus than COVID-19. Both viruses originated in China. But SARS, he said, did not have the financial impact that COVID-19 has had. That's partly because, during the earlier outbreak America, was at war with Iraq and SARS had to settle for headlines below the fold of newspapers. “And you know it is news that drives the markets,” Lloyd said.
China, he noted, was the sixth largest economy in the world in 2003, which accounted for 4% of global GDP. Today, it’s No. 2 in the world and boasts 15% of global GDP. “Most people probably know somebody who traveled to China in the last 12 months,” he said. That was not likely the case in 2003. U.S. trade and travel have changed tremendously since then.
In June 2003, when the SARS pandemic was declared over and the last case disappeared, the markets were up 14% from the beginning of the outbreak, he said. “Most sectors rebounded with vigor within just two quarters. The bounce backs included hospitality and travel.”
The most pessimistic projections about the financial impact of SARS were incorrect, and that’s because the war news was driving the market, and SARS took a backseat, he said.