Volatile times can be stressful for both investors and advisors but they don’t have to be.
Rather than panicking, Morningstar shared how advisors can seize these volatile times as an opportunity.
When advisors take on a new client, one of the first steps is to have them complete a risk assessment questionnaire. In volatile times it’s important to consider a client’s capacity to take on risk and still meet their goals. For example, is your client wealthy with retirement far ahead? Or is your client middle-aged with only their 401K? Your wealthy client will have greater risk capacity.
Coaching & communication
Assess your client communications and coaching. How often are you communicating with your clients? If you’re reaching out regularly and proactively you can “coach” them in preparation of volatile times. Are they familiar with your “stay the course” approach? Are they prepared to ride out the volatile times? Reaching out when things are smooth sailing and the market is good can help in the long run so that when the markets are volatile, they are prepared and don’t panic.
Take control where you can
When the markets are volatile it provides an opportunity for advisors to remind clients of the work that goes on “behind the scenes.” Let them know you’re not twiddling your thumbs watching the market’s wild ride but are instead rebalancing as needed and harvesting tax losses. This can reassure clients you have their best interest in mind and assuage fears in future volatility.
You can read the full article here to find more detail.
Read SunStar’s Special Report: Addressing Investors’ Emotions for more tips on communicating with your clients in volatile times.