4 Ways To Deal With Clients During Market Volatility - Pocket Risk


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4 Ways To Deal With Clients During Market Volatility

How do you deal with your clients during market volatility? I was recently reading a post on the anonymous advisor forum Advisorheads, where the community was trading ideas.  The question is, do you lay low and wait for the storm to pass or reach out to your clients and risk the chance of waking the “angry bear” as one advisor noted. Below are four strategies based on the discussion of about a dozen advisors.

1. “Leave them alone” and don’t do anything – The upside of this approach is clear. You minimize the threat of waking the “angry bear”. Pointing out volatility could lead to a client leaving your practice. On the other hand keeping quiet could result in your clients feeling you aren’t communicating properly. A Financial Advisor magazine study cited “failure to communicate on a timely basis” as the number one reason advisors loose clients.

I don’t believe any advisor wants to hide from their clients but they may want to hide from their past mistakes. Maybe you recruited a client who wasn’t an ideal fit for your business or possibly you failed to sufficiently educate them about the possibility of market declines. Reaching out now, will expose your past mistakes and could result in lost business. However, how can you build a successful business by burying your head in the sand? Leaving your clients alone is unlikely to be the best long-term approach but communicating differently with different clients could have the dual benefit of recovering from past mistakes and minimizing any market fears in your client base.

2. “Send out frequent emails when things get hairy” – It’s generally better to say something than nothing but this approach seems very reactive. The advisor on the forum says, “Clients and prospects love it. They know you are watching and have a plan”. I expect this is the least an advisor should do to deal with clients during market volatility. However, as another advisor says the “past year I have told pretty [much] everyone we will see a market correction soon, curious who will remember”. The bottom line is that you should be regularly making your clients aware that the market can go up and it can go down. At the moment it appears “going down” is more likely.

3. “I called/emailed most of my clients over the past two days. All were happy to hear from me, and I used it as my quarterly touch”.  For this advisor reaching out to all of his clients worked well (it also resulted in more AUM) but it was clearly part of his regular quarterly pattern. His clients were not getting a call out of the blue. However, his approach is very time consuming. Another advisor says “I used to get on the phone and call everyone, but found it to be counterproductive since many would then want to make unwise changes.” I wonder if the desire to make changes is the result of a lack of trust in the advisor’s advice or poorly recruited clients.  A client that is well educated, well recruited and trusts you would probably not demand to make “unwise changes”.

4. “You have to know your clients” – Here is a great quote from one of the forum advisors…. “You have to know your clients. I know which one’s need a phone call, and those are the one’s I call proactively to talk about the market when things get crazy. I have been preparing for a client appreciation dinner, which was tonight, but I did call 4-5 “sensitive” clients today. I only got one incoming call today, and it wasn’t a panic call, it was just a question, the conversation was…

Him: Should we be doing anything?

Me: No, this is just noise and while it might not feel good while it’s happening, it will pass, and you will be better off doing nothing. Less is more.

Him: Ok, thanks, that’s all I needed to hear.”


Throughout the post the general conclusion is that you should know your clients and phone the ones most likely to react to the volatility.  At the same time you should have some sort of newsletter or quarterly touch point with all your clients so they know you are watching and have a plan.  Lastly, you need to make a bigger effort to recruit the right sort of clients. Either clients that our willing to be educated about markets and risk or clients that trust your judgment.

What other good ways are there to deal with clients during market volatility? Give me your thoughts in the comments below.

Image source – Techyzone

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