How to Turn a Down Market into Client Loyalty

Wednesday, December 21st, 2011

Dur­ing the last month stock mar­ket have dropped and gyrated; some days by a whop­ping 5%, and in the case of many clients, wiped out this years gains. While this is bad for port­fo­lios, it doesn’t have to be bad for your client rela­tion­ships.

Will the mar­ket bounce right back, or con­tinue going down? Is this the begin­ning of the next bear? Who knows.  In terms of the growth of your prac­tice, it may not mat­ter. You do not have to be slowed down by the direc­tion of the mar­ket. The fact is the best and most suc­cess­ful advi­sors add clients in down markets.

I don’t mean to sug­gest that it will be pleas­ant. Is going through a down mar­ket easy? No. Can it be reward­ing? Absolutely.  Every­one looks like a genius in an up mar­ket. The pro­fes­sion­als stand­out when things are rocky. How do you build and strengthen client rela­tion­ships when the mar­kets are bad? Here are some suggestions.

1. Review your client port­fo­lios and make sure you are pre­pared for a mar­ket down­turn. Con­firm that posi­tions and allo­ca­tions have not got­ten out of whack because of mar­ket gains over the past cou­ple years. Eval­u­at­ing how those port­fo­lios might respond if mar­kets or inter­est rates changed sud­denly or sig­nif­i­cantly, and make any adjust­ments you think appropriate.
2. Be ready to describe to your clients how you have pre­pared for the pos­si­bil­ity of a mar­ket change. If the mar­kets begin mov­ing against you, have a com­mu­ni­ca­tions plan that includes mass e-mails or let­ters and the con­ver­sa­tions you will have indi­vid­u­ally in client appointments.
3. If the mar­kets con­tinue their slide, send out a com­mu­ni­ca­tion to all clients. Let them know you are watch­ing what’s going on, and are pre­pared to make any changes that are appro­pri­ate when the time comes. One of the more inter­est­ing things I have learned from work­ing with client groups is that they have lit­tle under­stand­ing of all the work you do on their behalf when they are not in front of you. Let them know. You don’t nec­es­sar­ily have to see them more fre­quently when times are bad but they need to under­stand that you are always dili­gently look­ing out for their best interests.
4. Bring your clients together. If you have put off or neglected an advi­sory board, or have been con­sid­er­ing start­ing one, now is the time to get it on the sched­ule. Engage your clients to tell you what they worry about. It may not be what you think. Get there guid­ance on the best ways of keep­ing in touch with the mar­kets turned bad again. What­ever their con­cerns, get them to tell you what kind of com­mu­ni­ca­tion with most effec­tively addresses their wor­ries. Would it be let­ters, indi­vid­ual reviews, or group meet­ings? Should you be dis­cussing their port­fo­lios, or show­ing them the impact of a down­turn on their finan­cial plans?
5. Act on their advice. When you imple­ment your com­mu­ni­ca­tion strat­egy, refer to your advi­sory board. Let all clients know that there is a group of clients you are actively engaged with to help you under­stand what kind of response would most effec­tively address what’s on their minds.

Many of the advi­sors I worked with in 2001 and 2008 were drained and exhausted by those dif­fi­cult mar­kets. The ones who kept in touch with their clients most effec­tively were rewarded for all that addi­tional work with larger prac­tices. Engag­ing your clients when things are bad will make your exist­ing client rela­tion­ships stronger and attract new ones.

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Tags: Allocations, Bad Relationships, Bounce, Client Appointments, Client Groups, Client Loyalty, Client Portfolios, Client Relationships, Communication, Communications Plan, Conversations, Direction, Genius, Interest Rates, Interesting Things, Little Understanding, Market Downturn, Market Stock, Standout, Stock Market, Whack
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