If there’s ever a time when financial advisors get to stress-test their communication skills, it’s when the stock market tumbles seven consecutive days and produces losses of nearly 11.5%. That was advisors’ reality as of last Friday.

The Dow roared back on Monday, but where the coronavirus disease 2019 (COVID-19) will go next and what its eventual toll will be is anyone’s guess. So far, health officials say the virus has infected 90,000 people, killing more than 3,000 worldwide. American authorities have reported a total of 90 cases nationwide, with six fatalities.

While the unpredictable nature of the virus and its impact on markets may make communicating with nervous clients challenging, advisors told Financial Advisor they have been quick to calm client concerns and often had silver linings to report.

“This is an opportunity for us, with the markets being as volatile as they are, to tell clients we are harvesting losses in taxable accounts and rebalancing portfolios,” says Ian Harvey, an advisor with Bridgewater Advisor LLC in New York City. The firm manages $1.2. billion in mutual funds and ETFs for high-net-worth individuals with portfolios north of $2 million.

“A handful of clients have called the office and we have sent one communication about the virus,” he adds. “But we are strategic portfolio managers and are not making tactical decisions based on this virus or any other single event. We work to capture long-term growth and that’s what we communicated.”

Smart advisors should use market disruptions to leverage effective communication that elaborates on the services and benefits clients are receiving, says Marie Swift, founder and CEO of Impact Communications.

“Times of fear and uncertainty—like we are seeing now—provide advisors with a great opportunity to underscore their value,” she says. “Most clients do not really understand what the advisor does on a day-to-day basis, so being in touch now can help reassure them that you are on top of things. Communicating with authority and a sense of calm is essential right now."

At Left Brain Wealth Management in Naperville, Ill., Freddy Garcia, president of investments, says he spent last week drilling down into each stock position the firm holds in its 31-stock portfolio in order to clearly communicate the firm’s strategy in the wake of the sell-off. “As the breakout of the coronavirus hit the markets swiftly in a negative way, we revisited every position we own for clients,” he says.

That led Garcia to sell the firm’s position in Carnival Cruise Line, which he has discussed with some clients. “We made that change and sold off a position in Carnival that we felt would have taken a lot longer to recover,” Garcia said.

In contrast, he strategically held onto Boeing, a stock he uses as a value play and which a number of clients asked about. Despite it being an aviation stock, it’s near-monopoly position as a publicly-traded plane builder should mean it loses less value and rebounds more quickly, Garcia says.

He notes that the firm had two positive days last week on top of strong year-to-date performance. “We were up 12% before the market went down, so a lot of the loss [approximately 10%] came from gain. I had some clients call and they wanted some reassurance of what was going on. But they know we don’t react to news stories.  As long as fundamentals didn’t change, we are holding tight,” Garcia says.

Thomas Balcom, founder of 1650 Wealth Management in Lauderdale-by-the-Sea, Fla., said he is “coronavirus proofing” his portfolios using market-linked notes as a hedge to protect from further pullbacks.

Market-linked notes are multi-year instruments designed for investors who seek exposure to the performance of an underlying asset or market, but without the downside risk of a direct investment.

“We’ve been using indexed notes since 2008, but now that the virus hit there are areas in the market we’re looking at hedging and investing further,” Balcom says, noting that one option for this strategy could include the U.S. Global Jets ETF (JETS) which plunged about 25% in the last week due to investor fears regarding travel-related stocks. “So we are considering linking a note to the JETS ETF this week because obviously six months or a year from now, hopefully the coronavirus will have dissipated and Jet Blue and American Airlines will have recovered.

“A lot of advisors say, ‘stay the course,’ but I say if we have an opportunity we will better structure [our] portfolios,” Balcom adds. He says he has been proactively emailing clients to assure them that his firm was monitoring the situation and taking steps to protect their wealth.

Eric Walters, managing partner at Silver Crest Wealth Management in Greenwood Village, Colo., says he started hearing from clients last Thursday and Friday. “They are concerned about the novel nature of a pandemic and the sharp drop in the markets. I pointed out that in the three most serious flu pandemics in the 20th century, the stock market was mixed, but generally positive. I also shared historical data that a correction of 10% to 20% happens approximately every two years and is corrected within four months.”

Of course every situation is unique and this virus may lead to lower global growth and even rolling recessions for the countries most affected, Walter admits.
“However, I still recommend that long-term investors maintain their discipline and not sell,” he says. “Many of my clients are asking about rebalancing to buy into cheaper equities, which I feel great about because it shows they have a long-term mindset and listen to us.”