As investors know all too well, the markets can be a daunting and tumultuous landscape. Explaining this to clients, especially in the midst of a volatile phase, can prove difficult even for the most experienced advisor. In his videos, “How to Have the Scary Markets Conversation,” behavioral finance guru Carl Richards walks us through how advisors can better communicate those “scary market” conversations with clients. Check out these top three takeaways from Carl Richards’ videos and click below to watch them.
- “Uncertainty is Reality.” Accept the reality that we are often dealing with uncertainty—in investing in life. The markets are always uncertain. We will never know exactly what will happen from one day to the next, and once we accept that, the easier uncertainty becomes to manage.
- Take care of YOURSELF. Diet, sleep, exercise, these are all important factors to managing the stress levels that come with these “scary market” conversations. You are the go-to, the middleman between your client and the tumultuous market, which means you get the brunt of these negative emotions. Speak to someone. Taking care of YOURSELF first ensures that you are better able to navigate your clients’ fears through this ocean of uncertainty, both mentally and emotionally.
- Have a clear process: Empathize first, then remind clients of their values, goals, and investment plans. Once they remember the “why” of why they invested in the first place, they are more apt to listen to your suggestion that they stay the course. Bring about rational thought without being overly factual. Clients in the throes of market turmoil panic don’t want to be bombarded with facts and statistics. When reassuring your clients, a more empathetic, personal approach will be more successful in keeping them in the markets in the long run.
Want to learn more? Check out the last two videos on "How to Have Those Scary Market Conversations with your Clients," from Carl Richards here: http://www.behaviorgap.com/mini-course-archive-imca/