Helping clients cut through the noise of recurrent crises

In an era of relentless crises and escalating fear and anxiety, we find ourselves shifting attention from one disaster to another, often without pausing to reflect on their true nature or validity. We become immersed in a cycle of doom scrolling, seeking out the next piece of terrifying, potentially market-tanking, news.

The inundation of information from social media and news outlets, both of which often employ "if it bleeds it leads" sensationalism to get attention, has led to a pervasive sense of unease and distrust among individuals. Against this backdrop, it falls upon advisors to help clients distinguish between information and inflammation. Financial planners play a vital role in helping clients distinguish between the deafening noise and actual risks to markets and portfolios which are cause for genuine concern.

It's no small irony that while we brace ourselves for headline catastrophes that may or may not materialize, real crises have a tendency to emerge without warning, leaving little room for communication and strategic planning. The velocity at which today's crises can unfold often catches us off guard. Even crises that we think have been averted — however narrowly — tend to unexpectedly reappear. Think last spring's debt ceiling crisis was behind us? Say hello to debt ceiling 2.0.

As advisors, the challenge lies in staying in front of these rapid developments once they occur, maintaining effective communication with clients, and providing a much-needed sense of security to help protect them against panic and unwise action. 

The key lies in choosing what information to deliver and how. Since the 2008-09 financial crisis, investors have experienced repeated exposure to potential market crises that received quick Fed fixes desensitizing them to the actual implications of market risk. 

This complacency investors have developed has been bolstered by the expectation that the Fed will save the markets no matter what. Surely, we reason, everything will eventually resolve itself. 

Take the last debt ceiling standoff. Despite periodic resistance, the debt ceiling has consistently been raised, albeit at the eleventh hour, leading many to dismiss it as a potential threat to our markets and the economy. Yet behind the scenes, experts had earnestly assessed the possible repercussions of even nearing the edge, as we did in 2011 and again earlier this year when we came within two days of a potential catastrophe. This constituted a real risk, albeit with low probability, but bearing tremendous global consequences.

To guide clients through the media storm designed to stoke fear and discomfort, consider the following: 

Speed, context and triage
How can you reimagine your client communications to improve the speed with which you share information? Today's news is delivered far more rapidly and pervasively than it was 20, 10 or even five years ago. You need to ensure your communication flow to clients is at par. Addressing legitimate client concerns in a stodgy email newsletter isn't inspiring. Video, social media groups and texting will get curated information to your clients more quickly. Addressing the loudest most persistent financial news cycle at the moment with encouragement about its context in the lifespan of their plan and past events that seemed momentous and now are forgotten can help deliver context and serenity. 

Cutting through the noise is important, and doing so will help bring them the peace that everyone needs. While different crises pop up, real or imagined, give clients a sense of perspective with ongoing communication about more general risks and how you have prepared them for these. We know we will have down markets and that pieces of the portfolio will underperform other parts, and global shenanigans will have unexpected impacts on different asset classes. The goal is to prepare a portfolio that has multiple layers of risk management and diversification of management style, not just asset classes.

Practice and client management

4 in 5 U.S. adults say they never received financial education in school: Edward Jones study

August 3, 2023 4:37 PM

Contact protocols
Then prioritize your clients and identify how each of your clients preferred to be contacted whether it be text, email, phone call, in-person. Some firms may prohibit the use of texting, but most have a system in place where your clients can receive a text. Use the word "email" in your CRM notes, so you can sort your contacts by communication preference (use asterisks around the word, or otherwise differentiate the use of the word "email" over normal usage). 

Run a monthly report of how often clients look at their statements online. If someone is looking at their statement every day, they may need some help. Find out what they are afraid of and make sure they know you are addressing their concerns in their portfolio or educating them so they can navigate the uncertainty.

Foster a culture of financial education
Expanding advice beyond the realm of delivering immediate guidance means encouraging clients to actively engage in their financial process. Organize in-person workshops or webinars on topics like behavioral finance or estate planning. Also offer curated resources to facilitate thoughtful conversation in the form of an accessible list of articles that you believe present a balanced perspective on financial and economic concerns. Keep the conversation going.

Balanced media diet
Finally, ensuring that your own media diet does not drift too far to the fringes will help keep your clients with you. To assess your own media intake, look at the advertising of the media you consume. Are they national brands, implying a more measured perspective, or smaller more unusual companies backing the content — ones that might be willing to sponsor something a little more on the fringes?

By embodying these principles, advisors can act as beacons amid the fog of information overload, analyzing real risks and providing their clients with personalized strategies. Despite the rapid pace of change, advisors can instill calm, helping their clients maintain a disciplined approach to their financial journey and navigate the storms that may lie ahead.