Advisors: Use These Four Steps For Crisis Talks With Clients

Just a month ago, many clients were coming off a year of double-digit gains and watching with anticipating as the Dow Jones flirted with the 30,000-point barrier. Then a wave of COVID-19 cases hit spread across the globe and the bottom dropped out of the market.

Many clients are scared, nervous and simply filled with anxiety over their portfolios, said Anders Smith, national sales consultant with Delaware Life Insurance Company.

"During times like these, unfortunately, our jobs as financial professionals become a lot harder," Smith said. "And it's really times like these when our clients need us the most, because this is when they're at the risk of making poor decisions about their finances and their investments.

"And they're getting caught up in all these behavioral traps that exists, and they're so easy for them to fall into them."

Smith hosted a webinar Thursday with famed psychologist Dr. Rick Jensen, who works with professional golfers and financial professionals alike. Jensen, the author of Drive to the Top: 5 Timeless Business Lessons Learned from Golf's Greatest Champions and other books, presented four steps to cover when dealing with clients during a crisis period:

Empathy

The first step is to empathize with the client and don't do it with a time limit, Jensen cautioned. To show empathy to a client means changing the question from a specific "What are your financial goals" to a more general queries, he explained.

"You want to ask questions like, 'What's keeping you up at night,'" Jensen said. "They might say, 'Well, you know what, I can't get to the grocery store because I'm so afraid to go in there because I live with my elderly parents, and I don't want to cause any risk. So I'm still trying to figure out how to get toilet paper.' And that may be their concern."

The point is showing the client that you recognize that things have changed in what might be a very severe way, he said. Getting the client to the action step they want and need to make will take longer during times of crisis, Jensen said.

"The premise here is don't make the assumption that they're going to want to immediately talk about the balance, or even the things that the financial professional might have been preparing to talk about," Jensen added.

Focus

Gradually, by hearing the concerns and delivering real talk, the advisor is attempting to lower the level of anxiety. The idea is to take the extra communication steps necessary to return the client to a good place where rational financial decisions can be made, Smith said.

You want to remind the client of their long-term goals, and how those long-term goals do not change because of short-term events, he said.

"We need to pull on the training that we have received, use those resources from your firm, to show your clients that this is a process that we've seen before. We've seen the market dip," Smith said. "We know that if we miss the biggest five or 10 days, that can have a significant impact on long-term successful investment.

"And those five to 10 days often come on the heels of a significant market downturn like we've just seen. So it's important to stay invested."

Prepared

One important step to keeping your clients prepared to be nimble and hardy during stressful economic times is trust. And trust can suffer if clients do not hear from their advisors during times of crisis, Smith said.

If they are hearing constant reinforcement, information and education from their advisor, the client is sure to be more informed. That will make that more prepared to move onto alternative strategies you design together, he added.

At some point in these conversations, the advisor will move to more concrete suggestions, Jensen said. Be cautious, he added.

"You see that equities are on sale, you might see this as an opportunity to engage the client in a Roth conversion," he said. "You might see that interest rates are low and there's lending opportunities. You'll see these things and maybe start to suggest them to a client.

"We still want to monitor the client's reaction to that opportunity. Many times if we're seeing any signs of resistance ... I always think I've got to do the Texas Two-Step. I've got to be willing to almost back up a step."

Action

The ultimate goal in assisting your clients through this financial crisis is taking actions that will stabilize their finances and preserve their retirement planning.

"If their anxieties are coming down, they'll be able to process information better, they'll be able to start to hear the ideas, the information, the opportunity," Jensen said. "And as they see it, a sign that they're actually processing it is they'll be curious about it. They may start asking you questions."

And if you've listened and empathized and patiently coached your clients through what might be more than one or two meetings, action steps are likely to follow.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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