Advice in Times of Uncertainty: Help Clients Overcome their Financial Fears
We are clearly living in uncertain times. COVID-19 has spread worldwide, the financial markets have responded with record volatility, and many clients are paralyzed by fear. As a licensed psychologist, I am regularly tasked with helping individuals manage fear. In times of uncertainty, advisors too must lean on their "behavioral psychology" skills as they help clients overcome their financial fears. Simply delivering well-founded investment advice is not enough. When fearful, clients often resist, avoid, and reject your advice. It is during these times that you can draw upon the following four skills used by psychologists to move clients from fear to action.
As clients are swamped with scary news, it’s understandable why clients would be overwhelmed with anxiety. Rather than conveying that clients’ fears are unjustified, or that all will be okay in due time, take a different approach. Put yourself in your clients’ shoes and empathize. Inquire about your clients’ concerns and fears, reflect how they are feeling, and meet them where they stand.
Say things like . . .
- I understand why you feel as you do.
- It is normal to have such reactions.
- Many people are responding just as you are.
When financial markets tumble, you likely see opportunity where clients see threat. You see buying opportunities where clients see exit doors. As a financial professional, your advanced knowledge, experience, and education provides you a readiness to act that is not shared by your less prepared clients. Before advising clients to act, take the necessary steps to prepare clients to hear and heed your advice.
Before advising clients to act on a recommended financial strategy, ask yourself: “What knowledge, information, and experience do I have that my client does not?” Consider how you can better prepare clients to see things as you do. What resources support your recommended course of action? What historical trends and evidence can you share with clients? What were the recovery periods around similar uncertain times in the past? How did your suggested financial recommendation work during these times?
Provide clients with . . .
- Known and unknown facts
- Evidence-based expectations for the future
- Background information for considered actions
Once you've adequately prepared your clients, deliver your advice through a lens of opportunity. Clients often view uncertain times through a lens of threat that clouds their ability to see opportunities that exist. Before calling clients, consider 1) how you intend to mitigate impending risks and 2) how you will shine light on available opportunities. Strive to ease clients fears by calm explaining the steps you propose to manage clients' perceived risks. As you reassure clients that their financial situation is in good hands, transition your conversation to existing opportunities (e.g., refinancing, re-balancing, business lending). As clients’ perceptions shift from threat to opportunity, their motivation to act heightens.
Direct clients’ attention to . . .
- Opportunities, not threats
- Strategies in place to manage downside risks
- Specific opportunities that address primary needs
The value of professional advice is only as good as what is executed. Thus, with opportunity on the front burner, take your clients by the hand and guide them on the pathway to what’s in their best interest.
Finally, recognize that there is no suggested timeline for the four steps we've discussed. For some clients, they will be ready to act immediately, and for others, it could be weeks. Monitor and move clients along the pathway to readiness, and when they are prepared to act, deliver your advice and execute.
Dr. Jensen is a renowned performance coach and author. In financial services, Dr. Jensen has consulted with top firms including Merrill Lynch, Morgan Stanley, UBS, LPL, Wells Fargo, Chase, and Charles Schwab, and LPL. In golf, his clients have combined to win 33 major championships, and in tennis, Dr. Jensen has trained winners of all four Grand Slam championships. Dr. Jensen has been featured on ABC, ESPN, CNN, and the Golf Channel.