3 approaches to educating clients in times of market uncertainty

By Emma Cramm

As financial advisors, we know that nothing in this industry is guaranteed. However, we do understand the certainty of market uncertainty.

While it is difficult to know how or when it will occur, volatility persists and healthy market cycles create opportunities that can benefit many of our clients. Tumultuous economic activity often leads to an influx of client conversations. The discussions had during difficult times arguably reflect how we have educated clients during times of market peace and prosperity.

When market volatility hits, we are presented with an opportunity to reflect on the ways that we can grow in educating clients throughout all periods of market cycles.

Our world is constantly bombarded with fear-driven, although entertaining, economic headlines that knowingly feed market-related anxiety and degrade any confidence in taking risk. In order to educate and free clients from the investment-related strongholds that headlines, habits and history create, we should take care not to overload them with economic data that they aren’t ready for, nor do we want to dismiss concerns and avoid the conversation altogether.

There seems to be a spectrum of how financial advisors engage conversations around investments. On one side, there are uninteresting, pretentious finance experts that talk over clients’ heads, leaving them bored and overwhelmed. In this case, a client can easily feel unintelligent and uncertain over how to engage.

Conversely, there are planning-focused counselors that stick clients in investment models and have the tendency to sidestep economic discussions. Here, a client can feel unimportant as their market concerns and curiosities go overlooked. These are obvious extremes, but there are fallacies in each that many fall into and can lead to poor client relationships.

Consider the following ways to improve the tools we utilize in our market commentary:

1. Educate intentionally. Clients long to be informed, and we have the information that can free them from some of the financial burdens they face. Pick one piece of economic commentary that applies to that individual client and meets their level of expertise. This should be unique to them, and something that comes up in their daily life. Then, when the discussion ends, they have one nugget that they can chew on and share with a friend or use as a defense when they feel anxious reading an article.

2. Prepare for a conversation, not a presentation. Create space for clients to ask questions and wrestle thought patterns. Watch their body language. If their eyes glaze over, stop talking. Come in with questions that invite their insight so they feel confident to participate. Cater your commentary as if you were talking with a 6th grader or a CFA, and everyone in between. This will allow you to be dynamic in conversation, and truly leave a client with information that they understand.

3. Compel action. Consider areas of their portfolio that would benefit from improvement, and use your commentary to set up a client to take action. Is more risk required to meet their goals? Are they facing the risk of over-concentration in one position? Do they have cash on hand that could be opportunistically invested?

We are in this every day, and it still takes us years to understand broad economic theory and how it applies to an individual portfolio. It is a gift and an honor to lead a client to understand how they’re invested and how to make the best of the opportunity that lies before them.

Emma is a Wealth Planner at Cadent Capital in Dallas, Texas, where she oversees new client onboarding and is a key associate for many of the firm’s top clients.

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