4 tips for advisors to stay CALM and keep their clients CALM, too.

I believe the next few months are going to be tough, and if what I see on TV is any indication … real tough. You have a pandemic, the presidential election, the Supreme Court battle, and if that isn’t enough, the economy influencing the stock market. 

With these issues it’s easy to understand why many clients are frazzled and exhausted from the never-ending volatility. When clients become tired of a situation, they are more prone to making bad decisions.

Think about all the bad decisions you have made in your own life. Were these decisions made when you were rested and in clear thought? Or, when you were stressed? If you are me, it is the latter. Every time I make a bad decision it is usually because I am under some sort of stress or fatigued. The number one thing many clients pay us to do is to help them avoid bad decisions amid turbulence. That’s why we believe advisors have never been more valuable than they are right now, in these challenging times. Can you think of a more turbulent time? What should you do?

Stay CALM:

- Communicate

A -Allocate

- Levitate

- Meditate

Communicate

We believe communication is key to helping clients navigate the highs and the lows of the market. Emotions can threaten an investor’s financial health. In fact, we recently published a Challenging Conversations Guide (ask your Russell Investments team for a copy) and an online resource dedicated to helping advisors communicate effectively with clients. A quick call or voice mail goes a long way. I also think sending a client a cup of coffee or going for a walk with a client is huge. One of the greatest tools you have in your kit is letting clients know you are available to talk and what you are doing for them. I think some advisors worry that they are communicating too much. Yes, there are some clients who don’t want a lot of communication, but that’s not likely the majority. Just make sure the communication is personal and intentional.

Allocate  

Make sure every client’s asset allocations are aligned to their risk tolerance. This year, it’s likely that large market swings have pushed their asset allocations away from their policy allocations. We recommend reviewing their situation to help minimize the drift. I also encourage you to read this article which provides three key considerations when contemplating the rebalancing decision. My colleague Erik Ristuben puts it this way, “We try to give clients the return they need, but survive the investing experience.” Clients love upside volatility but not downside volatility. Once you and your client agree on the allocation, then document and share with your client how sticking to a disciplined rebalancing policy can help them avoid costly mistakes, such as buying high and selling low.

Levitate

Stay above the fray and away from the negative conversations. You are not going to change anyone’s mind and no one is going to change yours. If you engage in negative discussions, not only do you feel worse, it makes everyone involved feel worse. I texted all my friends and family last month and told them I will not talk about politics anymore. The reason for that text was not that I don’t like to talk—my advisors know I doI just don’t want to lose friends and family over a difference in opinion. Do not get sucked in. Even if you think you know what someone believes, you may be wrong. So, don’t chance it. These conversations breed emotional reactivity, and this is the enemy of sound investing.

Meditate

I can see eyes rolling. I have been meditating for about two years now and it has been a life changer. I know some people pray instead of meditating, and that is great as well. The reason I started to mediate was because I was feeling anxious and becoming short with my family. Something needed to change. I personally use the Headspace app, but there are a lot of great meditation apps out there. Pick one and watch the difference in how you feel and act. The biggest lesson I have learned from mediation is: It’s not the situation (or words or event) that affects you, it is your response to it that makes a difference. You alone can decide how to react to a situation. In other words, stop watching news that upsets you. Stop reading Twitter and Facebook; instead read a book that makes you feel better. I am currently reading The Second Mountain by David Brooks on a friend’s recommendation. Being of a calm and sound mind will help you navigate decisions. Don’t let anyone or anything make you feel a certain way. You decide.

The bottom line

What does this all mean? Clients pay your fee because they are looking for someone to help them reach their goals. The only way they can reach their goals is to stick with their plan during turbulent times. You have to decide if you will be the reason they are able to reach their goals or just another advisor they don’t need. Keep CALM and carry on.


Related articles by Tim Halverson:

Signal vs. noise: Is noise affecting your ability to focus on investor behavior?

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Is your wholesaler your BESTIE?

7 things every advisor should know about the slacker generation

The GRIND—a key ingredient for advisor success

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