Leverage Planning for Peace of Mind in a Volatile Market
• Bryna Kanarek • February 16, 2021
As someone who has worked in the financial industry for over 40 years, I have seen a lot of ups and downs in the market. Everyone enjoys a good upswing, but there’s a lot we can learn from those downturns.
While the causes may always be different, one of the best ways to ensure your clients are prepared for a down market is with financial planning. Clients with financial plans in place are better positioned practically—and emotionally—to weather a volatile market.
Don’t Panic in a Downturn
The early market volatility triggered by COVID-19 provided a great recent example of what can be learned when the market falls. There were—and still are—a lot of unknowns about the virus and its long-term impact on our economy.
One of the first things I realized I needed to do for my clients was to check my own state of mind. I didn’t know any more than they did about what was going on, but I had work to do to reassure my clients that their commitment to planning would see them through.
Before reaching out I studied those plans. I ran a Monte Carlo simulation for each which told me all I needed to know about the conversation I would have with my clients.
As I had those conversations, I shared the report results. Not everyone wanted to look at the report, but I was able to tell them it’s there when they are ready, and most importantly I could confidently tell them their plan was okay.
Because the planning work had already been done before the market downturn struck, we had figured out any adjustments that needed to take place for them to stay on track.
This process however was not as seamless for my non-planning clients.
Not Everyone Has a Plan
About 80 percent of my book of business is comprised of planning clients. This means I still have some without current financial plans in place.
The work to get a clear picture of their situations during the recent market volatility was very time-consuming. Information had to be gathered directly from the clients and I didn’t always have the full picture if there were items they forgot to share.
This process was frustrating—for me and them—but it reinforced the importance of planning. In fact, recent research1 shows that 85 percent of advisors say their clients who have financial plans are more prepared to handle market volatility.
Now That We’re Through It, What Should We Change?
The next important lesson of living through a market downturn is connecting with clients afterward to see if there are things they want to change about their plan. Did it make them reevaluate their spending habits? Are there job changes that need to be addressed? Did they decide they want to retire sooner—or later?
The time to make changes is not during a crisis—after all, the plan is there to ensure they are on track. But after the dust settles be sure to connect with them and ask the questions to uncover any desired changes.
One outcome for me was the determination that any new clients I take on must have a personalized financial plan. To help people stay on track with their financial goals through volatile market situations, I need to know that the data is there to back it up. With a plan in place that we are both continuously working on, I have the confidence to do that.
Look for the Value Add
The nature of the market volatility that resulted from COVID-19 also gave me a chance to take a holistic view of my clients. Early in the pandemic when things were particularly uncertain, I sent frequent communications that were unrelated to managing their portfolios.
Sending tips on mental health, information about government assistance programs for small businesses, and links to news about thriving in a volatile market provided value adds that will strengthen my client relationships going forward.
Additionally, once the market had rebounded after the early pandemic downturn, I sent a survey to my clients. From this, I learned about other services they would like to see me offer. It was a great opportunity to find ways I can expand my business while further deepening client relationships.
Commit to the Client Journey
It’s easy to forget in the middle of a market downturn that valuable lessons can be learned. Your job as an advisor is to not only help your clients reach their financial goals but to reassure them in times of crisis that their plans are working.
Even though your personal reaction to upheaval may be different from your clients, you need to look at things from their perspective. Help them see the bigger picture, trust in your process, and reaffirm to them that you are committed to going on this journey with them.
1 eMoney COVID-19 Pulse Survey, May 2020, eMoney clients n=227
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