What’s the Next Crisis? Create Your Communication Gameplan. By: Gretchen Halpin

By Gretchen Halpin posted 05-03-2023 09:27


The recent bank failures and economic gloom have caused us to reflect on the near and distant past. A certain anxiety has taken hold in our advisor community with flashbacks of 2008 and the subprime mortgage crisis, Brexit, the COVID-19 pandemic, the crypto crash, and more.

Back in June, we wrote a blog called How to Communicate With Clients During a Down Market, which outlined fundamental ways and reasons why financial advisors need to communicate with their clients without adding to the noise of the headlines. It seems like history is repeating itself in some ways, and the tips we outlined in that article hold true during this newest “crisis” cycle.

This round amplified the geographic differences in the level of alarm. For those on the West Coast, it’s more likely that your clients could be more profoundly or directly affected by regional bank failures. Advisors in the Midwest and East Coast are getting more questions about asset protection to avoid future unrest. All of this drama reminded us of the following important lessons:

Speak Directly to Your Clients

Blanket statements can be found anywhere on the internet. In fact, trying to keep up with Reuters is a futile effort. Instead, focus on what’s most important to your client base and tie back any news that they might be hearing to what’s most important to them.

For instance, you should know where they bank – based on either account aggregation software or their original onboarding documents – and if they’re affected by recent liquidity issues. But you could also proactively communicate about how U.S. Treasuries factor into their overall portfolio and share a refresher on price vs. yield and maturity – and how all of those impacted the situation at hand.

Diversification Matters

It really matters. Now is the time to remind your clients of this fact. You’re used to applying diversification to clients’ portfolios, but opening the door to explore other risk areas could be equally crucial to their overall financial success. Now is a perfect time to reach out to your clients (especially those with held-away assets) and offer a second opinion or triage of sorts to ensure they have proper diversification in their overall financial picture.

Most significantly: Have they surpassed FDIC or SIPC limits on any accounts or at the same institution (and how to multiply their coverage with a multi-bank cash sweep program), do they have too much or too little in cash based on their time horizon, how to best harvest sector losses, should they consider another I-bond before rates likely change April 30th, how to plan ahead for different interest rate environments in 2023-24, etc.

Address the Emotional Aspects of Money

Conversations with your clients about past money experiences can uncover how and why they make certain decisions about their financial future. These biases based on past outcomes can have a tangible impact on their overall financial success. Simply checking in on how they feel about the current news cycle can create safety and an opportunity to show your clients that you care.

As an example, the fear and aftershock of the Great Recession caused some in the Baby Boomer cohort to underinvest in the decade-long bull run that followed. The smartest financial advisor marketing in the early 2010s encouraged those folks to get off the sidelines and get back in the game. For Millennials, it created a tough job market that dampened their early-career earnings, while doing them no favors in the recessions that followed. But it also made them the primary onlookers for the digitization of finance into trading apps, robo-advisor platforms, and, of course, crypto.

Ultimately, we’re all just people trying to do the best we can. Your clients hired you because they felt your expertise would help them reach their personal goals. Advisors can reiterate their value in times like these by proactively demonstrating that you have clients’ backs.