Quarantine Begins
Two months ago, our California county ordered us to "shelter in place,” thus my wife and I began our work-from-home journey. While most of my friends debated Netflix shows to binge in a quasi-quarantine, my work got more serious as clients’ account values began to nosedive and the outreach from clients poured in.
To say the least, wealth disappeared like I’ve never seen in my lifetime. My firm started the month managing close to $150 million—our clients’ life savings. I’ll never be able to describe the pain of watching $150 million turn to $120 million seemingly overnight. Millions of hard-earned dollars, vanished.
These account values are deeply personal to us. We’ve helped each of our clients design what their money could help them do some day. A logical person might see a short-term “correction,” but a worried family might see their retirement dreams ripped from underneath them.
Whether the fears are rational or not, acknowledging this pain is step one of sympathizing with clients and understanding how they feel in these sensitive times.
Managing Clients in Panic
On top of managing the accounts themselves, I’ve spent the past weeks talking directly to clients, hearing their concerns and discussing what this might mean for them.
After dozens of impromptu conversations, hours of reflection, and a couple sleepless nights, this has easily been the most significant and emotionally difficult few months of my career.
On the flip side, I’ve learned incredible lessons on how to manage clients through times like this—lessons I’ve never found in textbooks and will influence how I help clients forever. Below are some of the most impactful lessons.
People First, Opportunities Later
When markets turn for the worst, the most common question you’ll get asked is, "What should we do?" You’ll subsequently need to fight all urges to unleash your favorite strategies in response. This is about understanding them in this moment, not showing how smart you are.
The next thing to decode is figuring out which version of your client you’re talking to. Any well-poised person can shift into a frazzled version of themselves under stress.
At a high level though, clients can mostly be segmented into three categories. A subset of clients view market dips as opportunities and will want to scheme on the upside. Another subset will simply wait to hear from you and trust your executive orders. The last subset of clients will shift to sheer panic mode and need you the most. These clients will test your poise and highlight your true strengths (and weaknesses). Most importantly, these people are primarily looking for shelter, not an attack plan (yet).
Any basic investing course will teach you several, time-tested strategies you should use right now—don’t panic sell, rebalance, tax loss harvest, do Roth conversions and so forth. But when someone is calling because they’ve lost six figures of wealth in an afternoon, most of the aforementioned strategies mean nothing. Unless the strategy can make the money reappear, it’s not important to the client right now.
Investment firms or other logical advisers won’t make it any easier for you. You’ll be inundated with charts and graphs instructing you to “stay the course.” But if you rub charts and logic in the face of a fearful client, you will fail to connect with them during their time of need.
Sure, strategy and implementation to capitalize on the upside are hugely important for long-term success, but remember that they can sound meaningless to a distraught person.
Life Allocation > Asset Allocation
Speaking of “staying the course,” never forget that those plans can change, fast. During these two months, jobless claims in the U.S. surpassed 20 million. For the newly unemployed or anyone else affected, odds are decent that their course has shifted.
We all know that selling stocks low is the ultimate sin, but when your clients are suddenly uncertain of their ability to make ends meet, this might call for a course correction.
Said differently, reflexively shouting “stick to the plan” might backfire when you eventually learn there might be a new, better plan. It’s the planner’s job to learn what’s changed in your clients’ lives, and assess whether their asset allocation might need to be adjusted to match, even if it means selling at the bottom.
Control
When your clients’ world seems to be crumbling around them, there is comfort knowing you can stop the bleeding of their financial livelihood with a few clicks. When they call, they want to know if you’ll help them gain some control in their lives.
Back when you discussed their financial plan and showcased beautiful charts of a rosy future, the plan made so much sense. But in crisis mode, attitudes can shift to self-preservation and the lack of doing something might feel crazy to them.
Admittedly, last week I helped two clients commit the sin of selling stock at deeply low points. That decision haunted me for days—like I’d broken a sacred planner’s code. I finally found peace after listening to a wonderful podcast where the guest explained how selling during turbulent times actually makes sense for certain people, even though it’s academically unsound.
Ultimately, humans crave control during uncertain times, and sometimes the suboptimal choices are the best choices if it keeps your client generally headed in the right direction.
Articulation > Action
Cries for help will take many shapes. Clients will rarely articulate exactly what they’re worried about in those initial questions after markets dip into recession territory. They’ll invariably ask questions like:
- Can we sell stocks until this passes?
- Is there a smoother way we can manage this?
Instead of answering right away, begin by asking them questions about their well-being. “It’s been crazy lately. How are you and your family doing?”
Time and time again, I found that clients’ initial questions didn’t explain their feelings, concerns, or desires for action. They just wanted to open the door for a conversation. Sometimes, the conversation alone (with no action) was the antidote they needed.
Be Proactive in Your Outreach
Nothing is more exhausting than reacting to someone reacting over something else. By sitting back and waiting for the emails to pour in, I opened myself up to added hours of difficult conversations and unnecessary stress.
If I had simply reached out to those who needed me most before they contacted me, I could have controlled the tone much better. Sure, it would have required excellent foresight into who would be fearful, but it’s my job as their planner to anticipate their emotions.
As a firm, we mostly avoid email blasts to clients and instead prefer individual attention. That said, this recent market selloff was our time to be the authority on the subject.
There were a few days where we were silent, diligently working on our action plans for clients, but that silence felt like avoidance to them. We quickly adapted and regularly shared broad messages with our thoughts and opened the door for conversations. Being front and center during uncertain times is the strongest move you can make as a leader for your clients.
The Career Lessons
I’ve never been responsible for more clients (and wealth) in my life, and there’s nothing quite as humbling as being on the receiving end of several “what should we do?” calls during a crisis. I’ll never have all the answers at the right time, and I’ve learned that’s ok. The most important thing we can do for our clients and the people we care about is show that we’re here for them, no matter what life brings.