Are your clients calling about market fluctuations?

February 7, 2018 by Andy Penkalski

A team of advisors work to calm their clients

about the author:

Andy Penkalski

Marketing manager

Andy oversees all automated marketing initiatives. He is interested in always discovering new tools for brands and businesses to more effectively reach their audience and improve metrics for success within their own organization.

Your phone has probably been ringing off the hook this week.

The Dow Jones Industrial Average recorded its worst single-day drop in history on February 5, ending 1,175 points lower and at one point slumping 1,600 points below the opening amount. As nascent opinions on what led to the steep drop begin to surface, associations are being labeled as causations — it is an anticipated correction after a landmark January for all markets; it is a knee-jerk reaction to the prospective interest-rate hikes by the Fed.

Regardless of the cause for this initial plummet, the market rebounded by 567 points the following day. Still, that likely gave any investor enough time to frantically call their advisor (and possibly the only time they will call them all year). As reactionary as these sort of discussions are, these conversations provide every advisor with an opportunity to both maintain and grow the existing relationship.

The stock market is not the economy

It is obvious to all advisors and most investors, but sometimes the simplest consolations are also the most effective. It is important to remind a panicked investor that short-term fluctuations are neither indicative of larger downward trends nor a direct reflection of global economic health. The fact that this most recent downward turn coincides with an extremely healthy January jobs report demonstrates such realities. Depending on the age of any worrisome client, there may even be very specific market dips from the past decade or two that can be exemplified as historic storms that they have successfully weathered. 

Capitalize on the opportunity

An investor who regularly sweats the smallest market fluctuation likely does not have an extremely risky portfolio to begin with. Having said that, a client's strong reaction to specific market performance provides the advisor with an opportunity to discuss additional investment strategies that may offer better piece of mind. Even if this recommendation only adjusts their investment strategy rather than expand it, a relationship maintained through best-interest advice will pay off in new investment recommendations once markets stabilize. 

Be proactive about the fluctuation

Depending how many clients an advisor serves, it may not hurt to call the client first. Obviously, no advisor aims to sow seeds of doubt within their book of business, but most investors do pay attention to markets. Radio silence from a portfolio manager can raise more red flags than any market fluctuation. A proactive call regarding the viability of their current strategy along with an open invitation to discuss any questions regarding ongoing performance will be a boon for retention. 

To learn how Advicent technology can help stress-test your clients’ financial plans, click here.