During market turmoil, some investors will seek out an advisor for the first time; others will look to replace the ones they already have.
What does this crisis mean for the business of wealth management? The ancient Chinese used two brush strokes to write the word “crisis” with one stroke representing danger — and the other opportunity.
This metaphor has never been more relevant as we sort through the aftermath of social distancing, sky-rocketing unemployment, market volatility and economic recession caused by this insidious pandemic.
If you ask experienced advisors about these types of interesting times, they will tell you that in periods of market volatility and economic recession is when they have experienced some of their best growth; they know that there is true opportunity in crisis.
Their playbook is fairly simple and straightforward to follow — all it takes is a dose of confidence, perspective and pro-active communications.
Where to begin
Ultimately, what most crises do is create money in motion.
A big chunk of this money comes from two market segments of investors: those looking for advice from a professional advisor for the first time, and those who are dissatisfied with the response from their advisor and financial services provider during these chaotic times.
That first segment of “DIYers,” who have finally experienced a bear market after a decade of non-stop upward market moves, are in shock and many realize they shouldn’t be going it alone as society, markets and government involvement change dramatically.
Particularly after going through a historic market drop — both in terms of the velocity and depth of decline — many are realizing that this market induced body-blow wakened them to the fact that they had taken on more risk than they thought or were comfortable with.
In fact, a recent investor research project revealed that one in four investors are working with an advisor for the first time as a result of the pandemic. Accordingly, now more than ever, it is the time for advisors to be pro-active and visible.
To capture these first-time buyers, firms can think about a content strategy to publish timely perspectives on what investors can be doing to rebalance portfolios, better align risk with their investments, as well as the many benefits for getting a comprehensive financial plan in place to better position them to meet their goals and objectives.
At this point, everyone needs an update to their plan if they have one, and for those without, never before has financial planning been more critical.
The key to this “marketing during a crisis” approach is not to be too self-promotional, after all, these are times of real pain and suffering. Instead investors need a value-added approach: how can advisors help during these times?
Evelyn Zohlen, president of Inspired Financial and national president of the FPA, said it well: “Planners should think of their work as a public service right now. That can mean telling existing clients that they are available for any friends or family who are struggling. That is a very soft pitch, and it falls on ears favorably.”
Video becomes a powerful tool to create awareness of how you can help.
According to Megan Carpenter, CEO of FiComm Partners, a communications firm focused on the wealth management space, a “video first” strategy is necessary in these times of social distancing. Instead of typing up an email or blog post, simply record yourself on your laptop, iPhone or other camera.
Production values are less important in our society today because of the proliferation of non-formal video content on the Internet, so don’t over-think how you look on video; simply point, speak and record.
That personal touch with valuable information goes a long way and can be leveraged as a digital communication asset for social media, your website, as well as email communications.
People want to see you in these troubling times, so this type of communication can be very powerful, particularly as these new advice buyers are social distancing and Google searching for a financial advisor for the first time, and if they come across your name or your firm, what will they find?
A failure to communicate is the number one reason that existing clients fire their financial advisor. Surveys and research on this topic in both good times and bad are universal in pointing to this communication issue as the number one driver of dissatisfaction.
Which leads us to our second segment of investors also in the market for a new advisor. And there are the millions of investors not happy with their current advisor and financial services firm.
According to a recent survey by Y-Charts, two-thirds of investors are not happy with the level and frequency of communications they are receiving from their advisor, again fueling the demand for a new approach to advice; one which independent, planning-based advisors have mastered.
How do you find these dissatisfied investors? Simple — just ask.
Leverage your network of friends, family, colleagues, centers of influence (and clients if you are comfortable doing that) to ask this one question which has led to millions of new dollars and accounts for thousands of advisors over the years: “Who among your friends, family, colleagues is the most dissatisfied with their investments?”
This question triggers in the person’s mind a specific mention for someone they know who has said they aren’t happy with their advisor and investment firm, often generating an emotional reply, with a conversation resulting something like this:
“Oh, my cousin in Connecticut, Steve, is furious with how they never call him and that they put him in a complicated, expensive product that has lost thousands and thousands.”
“Is Steve someone I should be in front of?”
“Absolutely, let me give you his number…”
And voila, you have a strong lead and referral to someone who will have money in motion soon, looking for a different experience.
Asking this simple question in times like these is a low-touch, zero-cost, and easy way to substantially drive new client acquisition, but you do have to ask; and need to do it now while this issue is top of mind for everyone.
Nurturing referrals from clients often comes down to how you service and communicate with clients in these volatile times.
Leading advisors are adding value through rebalancing portfolios, tax loss harvesting, providing updates to financial plans, re-taking risk tolerance profile assessments, recommending re-financing to take advantage of historic low mortgage rates, moving client’s idle cash to higher yielding products instead of letting custodian bank sweeps return scraps, and more.
These visible, pro-active steps show to clients that you are there for them, adding value and earning your advisory fees. They also return dividends for future referrals several months down the line when people start to interact again and compare notes on their experience with their advisor during the pandemic.
Undoubtedly, the planning-based, value added experience of today’s independent advisor will shine in comparison to the typical indifference from the big banks and Wall Street firms.
Which leads to a final point: Get ready for your phone to start ringing — don’t reduce staff or short-cut technology to save costs to shore up your income statement.
Now is the time to double down on your business to create the capacity to capture this incredible opportunity to grow your firm.
Timothy D. Welsh, CFP is president, CEO and founder of Nexus Strategy, LLC, a consulting firm to the wealth management industry and can be reached at firstname.lastname@example.org or on Twitter @NexusStrategy.