What investors are thinking

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Rui Moura

Proactive, plain-English communications can keep investors on track.

By Rui Moura

As volatility in the markets started picking up at the onset of the crisis, I began calling Registered Investment Advisors (RIAs) around the country to get a better handle on the situation on the ground. From those conversations, we developed a series of articles we’re calling Dispatches from the Advisor Front.

Here, I’ll share perspectives that come directly from RIAs—everything from how advisors are using new ways to stay connected to clients to successful strategies for addressing investors’ emotional state.

We see advisors rising to the challenge

As a former military commander, I’ve seen my share of challenging circumstances. Calling advisors following the onset of the recent market upheaval, I was bracing for dire, panic-filled conversations. I found that, though many advisors sounded weary, the ones I spoke with were staying composed and assuredly serving their investors through the ongoing uncertainty.

How were they doing it? To find out, I asked:

  • How are clients handling the situation?
  • What is working for you day-to-day in your client conversations?
  • And what do you need right now to lead investors?

I received a diverse range of responses—unsurprising, since each advisor has a distinctive approach to serving client needs. Yet there was one striking similarity: Advisors already using plain English communications to stay in touch with clients, typically online and by email, were more prepared than those who had no comprehensive communications plan for the current crisis.

Why? Because they are spending less time now reacting to the needs of worried clients and more time on measured, constructive responses to leading their investors.

One advisor reports that he received an abundance of economic and market updates but “nothing to make clients feel better.”

Making clients feel better, as it turns out, may actually be more important in this moment than showering them with analysis or historical data.

What is working right now?

For many of the RIAs I talked with, frequent communications leading up to the crisis have been the key to addressing client concerns. Ron R., an RIA whose practice covers New York and Massachusetts, reports that he and his team have long been proactive with clients—and as a result, he says, they are getting very few panicked calls.

“For those who are upset,” he said, “we acknowledge what’s happening, empathize, and talk it out. Then we do a portfolio review and reinforce the importance of focusing on their goals.”

Further, advisors who have kept up with the times by developing new channels for investor communications—through email newsletters, blogs, and social media—now have an even greater advantage. Mark F., an RIA in Massachusetts, makes offering advice “in a language you can understand” part of the value proposition shown on the home page of his website.

By contrast, one advisor reports that he received an abundance of investor-ready economic and markets updates from an RIA platform provider but “nothing to make my clients feel better.”

Making clients feel better, it turns out, may actually be more important in this moment than showering them with analysis or historical data—and those advisors who were already good at reassuring clients before the crisis hit are doing it even better now.

Mark F. sums it up this way: “We successfully educated our clients through regular, ongoing communications. Most of those clients were with us through 2008 and 2009. Since then, we have reminded them that markets can be volatile but that we’ve crafted a plan to address this.”

Long-term relationships are built on trust

In the end, the value of solid, trusting relationships developed over years—often through a frequent, ongoing stream of helpful communications—seems to be paying off. One advisor even reported that clients were calling him to make sure he is doing okay.

“Clients are more interested in my emotional state,” reports Don G., an RIA from Washington state. “Most of my clients went through September 11 and the 2008 financial crisis. People I speak with are okay with this. They just want it to end so we can get the economy restarted.”

All of the seasoned, successful advisors I spoke with had learned hard lessons from September 11 and the 2008 financial crisis. Fortunately, they were able to transform those lessons into effective, well-defined communication strategies that helped them prepare clients for the current crisis.

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