3 tips to coach clients through volatility
E*TRADE Advisor Services
Sustained volatility is hard to stomach, sparking emotional decision-making and attempts to time the market. In fact, according to E*TRADE’s Independent Advisor Sentiment survey, advisors noted that the biggest mistake clients make is trying to time the market.
As stewards of clients’ nest eggs, advisors are critical to helping them weather volatility and honing their focus on long-term investing goals, rather than short-term decisions. Here are three tips to coach clients through a rocky market and emotional investing decisions:
Acknowledge their concerns
As a seasoned market participant, you know volatility is normal; but it can be very scary for the Main Street investor. The reality is a two to three percent move in the market is normal, but when there is a 300-point market decline, it can feel dire. Once it becomes a headline flashing on the news, it amplifies investor anxiety. In order to build trust and deepen your rapport with clients, acknowledge their concerns before diving into any tactical moves.
Refocus on long-term goals
Remind your clients to maintain discipline, focus on their goals, and remember the bigger financial picture.
Selling in a volatile market can exacerbate losses. Meeting with clients on a regular basis (even digitally) to review their portfolio, revisit their goals, and recalibrate their risk tolerance is a great way to help keep them focused on the long term. It also helps further your trusted advisor-client relationship.
Education is critical to helping clients contextualize volatility.
Hosting online events or webinars to scale educational efforts comes with an added branding and marketing bonus. In addition, tapping experts within your network to speak at events builds trust through third-party credibility.
With volatility at the forefront, investors are faced with the challenging decision of playing the market or staying put and risking losses. That’s where advisors come in—to keep clients on the most responsible path toward meeting their goals. Squarely focusing on client needs, especially in times of volatility, is critical to not only maintaining client relationships, but also cultivating new ones. Now more than ever, advisors can demonstrate their value to their clients by helping them tune out the noise and focus on the long term.