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Voices

Prove your value as markets careen

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Coronavirus now has the whip hand of the U.S. economy, financial markets and clients’ portfolios — for how long, no one can say. But it also presents an rare opportunity for advisors to demonstrate how they’ve prepared clients’ portfolios for an inevitable market downturn, to show how clients could potentially profit from the volatility and to reinforce the client’s value to the firm.

1. Make your message personal
Now is the time to take inventory of your pre-crisis mass communications to clients. What’s required now is your voice. When you send an email, always sign off by offering to call so clients can ask specific questions about their plans or situations. Crucially, each email from you must convey two implicit messages: the firm’s leadership is fully engaged and proactively engaged in implementing a strategy to meet the current crisis, and that each client is getting personalized advice.

2. Prioritize

Who are your most anxious clients? The newest? Reach out with a personal message to them first, writes Talia Pierluissi.

Who are your most anxious clients? The oldest? The newest? The ones just starting out in retirement? Reach out with a personal message to these groups first. Then touch base with the rest of your client base. All will appreciate hearing from you, even if it’s just to see how they’re doing. You want to let them know you’re here for them.

3. Bring them back to the plan
Difficult times call for difficult conversations. If handled correctly, these tough talks can highlight your value. Remind clients that, unique aspects of this market correction notwithstanding, you created their original financial plan with possible market corrections in mind. Highlight defensive positioning you may have built into portfolios — ones that are coming into play now.

Then, get back to basics. Are clients still on track to meet their financial goals? Do they have cash and bonds available to wait out the recovery of their stock portfolio?

4. Survey the field — and act

Periods of extreme downward volatility create opportunities. Clients want to hear you are proactively looking for these opportunities and recommending execution when the time is right. Have they been waiting for a chance to refinance their mortgage? If so, facilitate and introduce them to a reputable mortgage advisor. What about a Roth conversion? Could you convert for tax-loss harvesting? Is now a good time to put cash that has been sitting on the sidelines to work? There may be opportunities for clients who are currently or likely will be in a taxable estate, so you may consider helping them transfer wealth to heirs. Strategies like grantor retained annuity trusts and sales to defective grantor trusts are most effective when asset values are depressed and interest rates are low.

5. Be humble, be honest
Finally, be straightforward with clients. Don’t try to call the market bottom or imply you know what will happen. Stay open to their reading of the situation, avoid being defensive and focus on their feelings as well as their words. Clients are naturally feeling anxious and uncertain. Let them know you’re thinking about them and considering many scenarios. We don’t have all the answers, but actively listening and reminding them why they are invested the way they are is reassuring.

Remember, it’s in times like that clients truly benefit from having a trusted advisor. Conversely, advisors can demonstrate just what they do on a day-to-day basis to earn that trust.

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