By Renee Hanson
Through a barrage of negative news, intensified fears and an uncertain future, the COVID-19 pandemic has heightened people’s emotions. This can often affect the personal side of financial planning and overshadow the technical perspective.
People frequently make decisions based on their emotions, making it important for us to share technical information in a way that resonates with clients to balance those emotional responses with factual knowledge. Financial advisors can serve as a necessary continuity and support at this uncertain time when clients are searching for clarity.
Rely On The Groundwork
The Million Dollar Round Table Economic Uncertainty Study conducted in April found more Americans are at least moderately nervous that they personally will be impacted by a recession in the next year or so compared to a previous survey conducted in October 2019 (72% 2020 vs. 55% 2019). To help clients navigate the increasing uncertainty and associated anxiety, encourage them to rely on you as a resource and refer back to the foundation of their financial plans.
For example, although the virtual environment may be uncharted territory, your client interactions can thrive if you’ve cultivated strong rapport in the past. Clients can find comfort in familiarity, so referencing your previous work to align clients’ top values, goals and risk tolerance will help them focus on the horizon ahead rather than on the valleys of market volatility.
Consider using this time to step back even further to reevaluate individual communication preferences. Some advisors may simply define this as the way they contact clients - calls, emails or in-person meetings.
However, I see this as a more integrated and nuanced conversation about how clients want to receive communications. Do clients need charts, facts and figures to decide in the moment, or do clients need time to process information at a slower pace?
Maybe they admit a tendency to procrastinate, showing a need for their advisor to set up steps they can execute, or they need reminders that every element of their plan is interconnected when their focus drifts. These preferences will help you understand what clients need to hear to make financial decisions that make them feel comfortable and confident – characteristics that are essential in the current environment.
This foundational work sets the standard for client conversations and leads to fewer changes in the frequency of interactions when unexpected events like COVID-19 occur. Instead, I can simply remind my clients why they hired me for long-term planning and revisit what’s important to them as necessary.
For a while, the only news we had as consumers was about the turbulent market conditions and COVID-19. In fact, the same MDRT survey found that 23% of Americans very closely followed the news about the stock market in early 2020, which is an increase compared to only 11% during a period of volatility in 2018.
While many have simply followed the uncertainty that the pandemic has caused, this constant news cycle led to changes in client conversation topics. Almost two-thirds (63%) of Americans who currently work with an advisor say they talked to their advisor about the impact of COVID-19.
In my experience, many are expressing fears of mortality. Certainly, financial livelihood has been threatened as with past recessions or market turbulence, and advisors may be used to speaking about sensitive topics. However, lives are also at risk now, and that drastically changes the conversation and its tone.
This is part of the many “lifequake” moments – life events that are highly disruptive with significant ripple effects – that make advisors essential as they guide clients through their transitions. Clients need advisors during these times.
To acknowledge the fears and emotions clients are currently experiencing, consider highlighting how you continue to follow safety guidelines within your business while also making sure clients are staying safe. Let your clients know you are focused on maintaining your own health so you can provide a sense of continuity through client service and support in their personal recovery that can be counted on when so much else is unknown.
Keeping In Touch
Reflect on how you can maintain high levels of communication with clients in a virtual environment and continue to deliver value. In my practice, we keep in touch with clients via email by focusing on two unique types of communication during this time – market updates and personal stories.
Market updates are concise and tailored to the specific impacts of the coronavirus, including what we can expect to see next from a financial perspective. For example, we initially set up scenarios that related the peak of COVID-19 to the resulting recession. A spring scenario would have involved a peak in April and economic recovery in May.
If that were the case, we would have expected a recession to still occur but with a quicker recovery. Through this context, clients increased their understanding from the onset that the longer it takes for the peak to occur, the longer the anticipated financial recovery.
On a personal level, we aim to continue developing close relationships with clients. We trade stories about how we are spending our time and update them on what all our staff has done during stay-at-home orders.
If one of us tried out a DIY haircut, we ask for our clients’ opinions on our next video call. Instead of flooding them with emails or phone calls about the markets that may cause even more panic, we try to find the silver linings and lighten the mood with personal stories to which they can relate.
Onboarding New Clients Virtually
Just as many people are spending time organizing their homes, many are also getting their financial houses in order. Clients who have previously put off certain planning elements may be more receptive to policies for long-term care, disability, life insurance, etc. With these needs in mind, prospecting doesn’t need to stop in this environment. Clients have hired me over the phone because the timing seems right.
According to the same MDRT study, more Americans say they would seek the help of a financial advisor due to market volatility (17% in 2020 vs. 13% in 2019) and a looming recession (21% in 2020 vs. 13% in 2019) now compared to a previous survey conducted in October 2019.
Potential financial loss due to COVID-19 may also prompt Americans to seek out advisors (28%). Instead of waiting for the next pandemic, I encourage clients and prospects to use this time to organize their financial future.
The remote environment has led to more business efficiencies to the point where we can often establish prospects as clients the same day and onboard then quickly. We have used this time to create a digital experience with strong communication at every touch point – from uploading documents to obtaining signatures electronically and more.
Refining your onboarding processes to help even more consumers who seek out financial guidance during this time is such an important undertaking.
Long-Term Implications For Financial Advisors
Crises create the need for financial advisors. In the long-term, I expect this global event to influence how consumers work with advisors as they will likely be less focused on a rate of return and more receptive to continuous guidance.
This shift from money management to comprehensive advice will continue to advance our industry as clients look for an advisor who can decipher and communicate how global events will affect their financial future. Our role will be to help clients prepare for the unknowns while providing valuable continuity and indispensable support.
Renee Hanson, CFP®, BFATM, CEP®, CDFA®, CFS®, Private Wealth Advisor and eight-year MDRT member, owns Affinity Wealth Advisory Group, a private wealth advisory practice of Ameriprise Financial Services, in Phoenix, Ariz. She specializes in fee-based financial planning and asset management strategies and has been in practice and helping individuals navigate the financial aspects of divorce and other major life transitions for 29 years. Renee may be contacted at email@example.com.
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