The Art Of Advisory

Getting Through To Your Clients

In times of uncertainty, relationships matter

by Paige Fowler

Ms. Fowler is an advisor with Edward Jones. Visit www.edwardjones.com.

Inflation. A once-in-a-lifetime pandemic. Volatile markets. And now tragedy unfolding in Ukraine.

To say times are uncertain seems an understatement. But if my 17-plus years as a financial advisor have taught me anything, it’s this: When the world seems out of control, my clients look to me to help steady the ship in a sea of change. And it’s this deep and trusted relationship that enables us to successfully navigate financial disruptions together — and stay focused on the long game.

Listen

As financial advisors, our clients turn to us for our expertise — but don’t mistake expertise for information. People are flooded with information. Part of our responsibility as professionals is to shield our clients from the endless onslaught of information — including the information coming from our own mouths. Sometimes, the best thing we can do is stop and listen.

Clients want to be heard.

A recent survey conducted by Edward Jones and Morning Consult shows that Americans are at a crossroads with how they view the current state of the U.S. economy — 45% are optimistic in the direction the U.S. economy is headed, while nearly as many are pessimistic. Their top concerns include inflation, supply chain disruption, the employment rate and interest rates.

This is consistent with what I’m hearing from my clients.

In our branch, with the help of my branch office administrator and technology, I block out time to call my clients — especially during these turbulent times. About half are relaxed about what’s going on, and the other half are scared and pessimistic. I had a client tell me she was going to move out of the country because “things are crazy.” It’s important for me to acknowledge and say out loud what my clients are feeling about what they’re seeing on the news. I ask them, “How are you feeling?” or “What are your thoughts on this?” They need to understand that I recognize where they are at and validate what they are feeling. I don’t need to convince them they are right or wrong. My job is to educate and walk alongside them.

Stay On Track

Information and access are so different from a few years ago. When I’m talking to clients and prospective clients, I ask, “Who are you listening to for financial advice? Where do you go for financial information?” Sometimes, we might be listening to the same things, but knowing their source helps me understand their level of involvement and their expectations of me.

Americans’ expectations of their financial advisors are changing. More than half (54%) of adults surveyed indicate factors such as COVID-19, interest rates and the unemployment rate have changed their expectations of their financial advisor. Our survey revealed that the number is even higher among Millennials who work with financial advisors (75%).

I’ve seen those expectations change in my own practice. We’re seeing it in our younger clients, who want to be engaged in the conversation, much more so than when I started as a financial advisor. They’re concerned about their futures and looking for referrals for estate planning and taxes. They want us to help them build a much more well-rounded financial strategy. Back in 2005, they weren’t even asking these questions.

Another big concern among Millennials is debt, especially student loan debt. They want to have a plan in place to pay it off. I also have a lot more clients who’ve chosen not to have children. They are marrying later and want different things. Instead of saving to buy a home, they want to travel. They talk to me more about their 401k. They want to be sure they’re on track in all areas of their finances.

I see a lot of clients being overconfident and not adjusting for their risk tolerance. Because we've had great returns for so long, I've had to remind my clients that market downtowns are inevitable. Stock prices will go down...

Again, their expectations have changed — and they’re much more proactive in asking me about all aspects of their financial picture.

Those who work with a financial advisor tend to find comfort in our knowledge and experience — which help them feel more informed and less stressed and frustrated about their finances. That same Edward Jones-Morning Consult survey showed that of those who consult a financial advisor, 79% work with one on a regular basis — emphasizing the important role we play in helping our clients stay on track.

It makes sense: When clients feel more in control and confident in their financial futures, they are more likely to hold firm to their long-term financial goals.

Keep Emotions In Check

Volatile markets can churn up emotions — including stress, anxiety, frustration, concern, disappointment and excitement — that cause investors to reconsider investments and make changes that can derail long-term goals. An overly negative view of the economic outlook can result in an emotional sell off of solid investments, and overly optimistic view can result in more risky investment buying.

Our survey underscored this by revealing a correlation between concern and action. Basically, the more concerned people are with what’s happening in the economy, the larger the impact those concerns have on their financial decisions. Put another way, when people feel worried about their finances, their natural impulse is to act — to do something to relieve those worries. Having a long-term financial strategy in place and working with a financial advisor to ensure those goals are being met plays a crucial role in keeping those impulses in check.

I see a lot of clients being overconfident and not adjusting for their risk tolerance. Because we’ve had great returns for so long, I’ve had to remind my clients that market downtowns are inevitable. Stock prices will go down. The only way to drive home the point is by going back to basics and using real numbers — plugging those real figures into their real portfolio and showing them the risk.

Case in point: I have a client who recently retired with a lot of equities in her portfolio. Several years of good growth had made her overconfident in the market. As the market became more volatile, our relationship became a steadying force. Being able to have consistent conversations with her about the market changes and her overconfidence allowed us to not panic. Because we had these conversations, she knew that I was paying attention to the market and its impact on her financial goals. She has some cash reserves which I encouraged her to keep — and this has allowed her to weather the volatility without much stress.

My experience with this particular client is consistent with what we found in our survey: There is a gap in economic and financial knowledge, leaving nearly a third of Americans feeling less than confident in their economic literacy. As trusted financial advisors, we can play a key role in building financial knowledge and confidence — two important factors in building financial resilience. Translation: My client understood her investment choices were risky, but she knew, with my guidance, she would be OK in the long-term.

She could never fully trust the markets; but she could trust in our relationship.

Steady the ship.

 

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