Watching the market plummet is frightening, especially for clients who have a lot of their wealth tied to investments. It’s not always easy to talk with clients who are seeing their investments suffer and panicking about their financial stability. As hard as these discussions are, though, they’re part of the job for financial planners, so you need to make sure you plan ahead.
I’ve had to deal with a lot of these situations in my career. Often, clients come to these discussions anxious and fearful. I’ve had several who were even aggressive – looking for someone to blame when the money they invested is now lower than what they expected.
You can’t always prepare for the nuances of every discussion, but you can spend some time thinking about how you’re going to handle tough conversations.
1. Be Compassionate
When clients are watching their investments just disappear because of factors they can’t control, it’s stressful. They’re afraid, and that fear is completely real and reasonable. Recessions can have devastating consequences, and people are anxious about losing their retirement funds and financial stability. Before you do anything else, it’s essential to remind yourself of this so you can approach your clients with compassion.
I had a client recently call me in a panic because of what the market was doing. She was anxious and aggressive – looking for a way to blame me for the money her investments were losing. It would have been easy to get angry and aggressive right back, but it wouldn’t have helped anything.
This client’s fear is completely understandable. She’d lost six figures of wealth during the last recession, and she’s justifiably afraid it will happen again. If I’m not willing to see things from her point of view and be kind to her, I won’t be able to give her very good advice, let alone maintain a productive relationship with her.
It’s understandable that a client would feel worried and even angry when they see the market wash their investments away. You need to be compassionate and respectful of their feelings. The key is to find a balance between validating those feelings and still being honest with your advice.
2. Have Conviction
The second component is conviction. Know what you believe. You helped the client build their investment strategy for a reason. You did your research, and you created a plan that was based on reliable facts and data. You recommended these investments to your client as part of a long-term strategy. Remind them of the reasons to stay in the market, and help them remember that the short-term dips aren’t nearly as impactful as the long-term gains.
Dealing with a client who’s emotional and upset is hard, and a lot of it just comes down to practice. It’s not easy to handle a client who’s aggressively blaming you for their stock market losses or one who wants you to promise them that they’ll get it all back in a few months. When these situations happen, it’s important to stick with your convictions. Your confidence will help build their confidence.
3. Stay in Communication
Regular communication is always important, but it’s especially vital during market dips. Your clients will need a lot of reassurance, and that might mean scheduling a couple of extra meetings.
You might have clients that want you to promise them that things will look better at the next meeting. I had a client recently who told me that they didn’t want to be having the “same conversation” about the market in three months or six months.
Of course, I don’t want that either – I’d love to tell them that our meeting next quarter will be about what to do because the market is picking up again. But I can’t promise that. No one can! And as tempting as it is to give our clients overconfident promises or sugar-coated predictions, that’s not helpful for you or them.
The market may be ticking up again in a few months. But it might not be. So instead of promising your client that the next meeting will be different, promise instead that you’ll be there for them no matter what the market does.
Plan ahead for difficult client conversations
Watching the market plummet is frightening, especially for clients who have a lot of their wealth tied to investments. It’s not easy to talk with clients who are seeing their investments suffer and panicking about their financial stability. As hard as these discussions are, though, they’re part of the job for financial planners, so you need to make sure you plan ahead.
How do you handle tough conversations with your clients? Let us know your thoughts in the comments.
Good communication is hard to learn from a textbook. Amplified Planning CORE gives you the opportunity to see expert planners in action as they help their clients navigate real-world issues. As you watch these client meetings, you’ll get expert commentary from the planner about their thought processes and decisions. Get all the details about Amplified Planning CORE and find out how you can earn experience hours toward your CFP® certification.