The wealthy, for the most part, believe in the value and wealth-creating properties of the markets. Nevertheless, they still get spooked—sometimes seriously spooked—by significant drops in prices. The roller-coaster activity of the markets can actually be as disconcerting as a steady decline.

What’s important in times of market upheaval is to communicate with your wealthy clients and help them understand the bigger picture. In other words, you need to effectively manage their expectations during the roller-coaster ride. By keying into a wealthy client’s high-net-worth personality, you can more easily and effectively customize your messaging to ensure not only that these investors continue their relationship with you but that you also garner more monies to manage.

Each of the nine high-net-worth personalities’ perceptions and their reactions to the strong swings in the markets are different. Moreover, connecting with each personality around the topic of market volatility can enable you to not only continue and strengthen your relationships but also provide the opportunity to generate additional business.

Core Messaging
Core messages are very personality dependent. While the overall theme is not to be concerned and to think longer-term, each high-net-worth personality needs to hear this in ways he or she can readily relate to. In Figure 1, we highlight the core message by each high-net-worth personality.

What’s important is to be able to take a core message and connect with the respective high-net-worth personality. The following are some examples:

Family Stewards: “As we’ve discussed, markets go up and down. What’s happening is the market is not going to hurt us in the long term. You’re still going to have the monies to take care of your family the way we talked about.”

Independents: “This is the market volatility we’ve been expecting. The fundamentals still look good. Let’s keep our eyes on things and stay focused on your goal of retirement. Over the next few months, we want to make sure we’re on target for your retirement.”

Phobics: “Something’s going on in the stock market. I’m carefully watching it for you. By the way, how are the kids?”

The Anonymous: “Remember the e-mails I sent you about market volatility? I want to assure you that we’re watching things very carefully. We’ve put together a confidential analysis for you. You’ll have that analysis later today and we’ll talk about what steps we should take.”

Moguls: “Our top strategists believe the market volatility will provide many excellent investment possibilities. We should take the high ground and move in times of weakness.”

VIPs: “We’ve pulled together some of our top people to review the situation for our most important clients like you. We see that our most astute investors are taking advantage of the market volatility.”

Accumulators: “Let’s talk about the recent market activity. This is a bump in the road we’ve been prepared for. Market fundamentals are still good so we’re confident we can achieve our aggressive growth objectives. We now have opportunities to make more investments consistent with our original plan.”

Gamblers: “The odds are better than any card game. It’s time to think about what moves we should be making here to take advantage of what’s going on in the market.”

Innovators: “These are exciting times. Let’s consider the opportunities. All the volatility in the market calls for state-of-the-art thinking.”

These examples are only intended to provide some direction concerning taking the core message and applying it for each high-net-worth personality. What’s important is that you make the communications your own and truly individualize them based on your insights into each of your affluent clients.

In times of clients’ personal stress (during market volatility, for instance), you can solidify your relationships with them by making the effort to connect. At the same time, you probably have some opportunities to leverage the situation and gather more assets to manage.



The High Potential For Gathering New Assets To Manage
While it’s certainly not always the case, most affluent individuals use more than one financial advisor. Employing multiple financial advisors to invest their monies is regularly seen as a diversification strategy. At the same time, there are probably many wealthy individuals who have substantial pools of money “sitting around.” For example, many wealthy individuals have large sums in their non-interest-bearing bank accounts.

During times of market volatility, you can position your expertise in ways to do more business with your wealthy clients. Moreover, it’s important to know which high-net-worth personalities are most likely to give you more money to manage (presuming you’re not currently managing all their funds).

We statistically constructed probability scores tied to the high-net-worth personalities (Figure 2). Accumulators are the most likely to provide you with more monies to manage. There is also a very good chance that they have additional funds you are currently not investing. In stark contrast, phobics are the least likely to give you more funds, and there is a good chance you have most, if not all, of their investable assets.

Overall, based on the analysis, most of the personalities are excellent candidates for you to gather more money to manage when the markets are imitating a roller coaster. The key is to show them the benefits of letting you manage more of their wealth. You can do this by connecting with them in meaningful ways.

Conclusions
Financial advisors cannot control nor influence the gyrations in the markets. However, they can benefit from these gyrations. By using high-net-worth psychology to be effectively responsive as well as structure communications, you are able to build stronger relationships during these swings.

Many affluent investors use more than one financial advisor or have uninvested money on the sidelines with nobody. You can help them understand how to capitalize on the volatility. This entails using high-net-worth psychology and educating them on the value of skillful investing in turbulent times.

Russ Alan Prince is president of R.A. Prince & Associates Inc. and executive director of Private Wealth magazine.

Brett Van Bortel is director of consulting services for Invesco Consulting, the sales consulting group within Invesco Distributions Inc. The opinions expressed are those of Russ Alan Prince and Brett Van Bortel, and are based on current market conditions and subject to change without notice. These opinions may differ from those of other Invesco investment professionals.