The coronavirus outbreak is changing how many Americans work and interact – but the changes are not quite a dramatic for technology-savvy advisors.
In fact, advisors have learned from the 2008 financial crisis, as well as more localized disruptions caused by natural disasters, to build more resilient businesses with tech-driven continuity plans – and the need to maintain communications with their clients.
“Our clients are focused on taking care of their end clients’ concerns and managing communications with those end clients,” said George Tamer, managing director for strategic relationships at TD Ameritrade Institutional. “They’re monitoring how their clients’ investment plans and financial plans are faring in the volatile markets, and they’re planning on staying in close touch with those clients and reminding them that this is the reason they hired an advisor.”
Most advisors can also take comfort that their businesses have been here before, said Tamer, and most have implemented technology that has increased their efficiency, helping to mitigate the market downturn’s impact on their margins.
“In 2008, advisor AUM dropped by 18% while the market dropped 37%,” said Tamer. “Advisor revenue dropped 9.5% and owner income dropped by 18%. I think advisors will be able to weather this storm because they have created diversified portfolios for their clients – but it will certainly take a toll on their revenues and their bottom line.”
One of the most important messages advisors can deliver to clients is simply that they remain attentive and able to respond to any client concerns, said Tamer. Clients also need to be reminded that they have a plan in place that is built to operate through disruptions to financial markets.
Tamer said that ideally, advisors have consistently reached out to their clients with communications regardless of market activity.
“These efforts aren’t things you started doing in the last month as volatility increased – successful advisors hopefully have been communicating this way all along with clients, they just ramped up the communication to be proactive around what happens in a bear market,” said Tamer. “That should help stave off client attrition.”
Advisors who aren’t in frequent communication with their clients around such disruptions are vulnerable, said Tamer, which presents an opportunity for their competitors.
But experienced advisors also have the opportunity to tell clients that they’ve been through this before – most advisors were in business during the 2008 and 2009 market declines driven by the global financial crisis.
“We learned from 2008 that if you’re not hearing from your clients, you shouldn’t assume that they don’t want to hear from you,” said Tamer. “They want proactive communication.”