Emotionally Invested

By Evan Sparks

Although market indexes like the S&P 500 and Dow Jones Industrial Average have nearly recovered from their pandemic-triggered crashes, the market collapse in the first quarter spooked many investors and savers, and with the Fed’s return to zero rates, margin compression is making investment planning even more difficult. In today’s volatile environment, wealth managers and financial planners are having hard conversations with their clients. Here, banking leaders and wealth management experts offer a few tips to build emotional intelligence into those conversations:

Understand that clients may be angry at you. Even for people who follow the financial news, staring at their first-quarter statements was a jaw-dropping moment. (The S&P 500 was down nearly 20 percent in Q1.) “Somebody who’s upset about where their portfolio is just upset,” says Dave Coffaro, principal at the Strategic Advisory Consulting Group. “We can’t internalize that. We have to just understand and help them understand what’s going on we’re going through this cycle.” Be honest with clients about what you don’t know, adds Mark Gim, president and COO at Washington Trust. “We don’t know how long this could go on—or when it will end.”

Reach out proactively, even—or especially—when the news is bad. “If you wait for client call today, you’re at a disadvantage,” says Coffaro. “Part of what we learned in the 2008-09 market crisis is that those advisers that reached out and had hard conversations with their clients, as well as the comforting conversations, actually tended to win more business. Those that didn’t lost business because the client at some point said, ‘My banker wasn’t there for me.’” Increased frequency should be the norm—in early March, when things were most difficult, Intrust Bank in Wichita, Kansas, was sending out weekly formal communications in addition to adviser calls, says Chief Investment Officer Bill Martin.

Have a normal conversation. In this time of social distancing—and with many wealth management clients in age groups especially vulnerable to COVID-19, clients are often eager for contact, says Martin. “It was less about ‘How’s my portfolio doing?’ [and more]‘Thank you for connecting with us early.’ We were busy doing lots of calls that we have made, but from the client perspective, we may have been their only call that day.”

Project authority and confidence. We’ve seen bear markets and even pandemics before—and investments have recovered. Clients who spend all day glued to CNBC for Fox News may miss that, but bankers can emphasize an optimistic outlook without going into technical market-speak. “If that communication is always sent in what I call a negative tone, I think it could be counterproductive,” says Martin. Coffaro offers an example from the medical field: a patient with advanced cancer goes in to meet with a top oncologist. The oncologist models her expertise and confidence by saying: “I know it’s hard for you. But I also want you to know that this extraordinary event for you is Tuesday for me. Because this is what I do.”

Keep the conversation on the bigger picture. Wealth advising is more than just asset allocation. Banks that employ a financial planning or financial wellness model can discern opportunities to help customers sort out strategic problems. “There is opportunity to help solve problems in times of crisis,” says Gim. “And we lead with offering those solutions.”