One of the conversations I’ve been having frequently with friends and clients over the past month has been about confidence.
The word “confidence” isn’t always said out loud, but it’s underneath much of what we discuss.
When we talk about things like companies we know laying off staff, wondering if anyone close to us will get COVID-19, and what opportunities can be grabbed hold of when the world sometimes seems to be at a standstill, what we’re really doing is navigating around how confident we feel about ourselves and the lives we’ve built.
I’m sure that many financial advisors are having conversations about confidence with their clients right now. But how do you instill confidence when the world is closed? Here are a few thoughts.
If you aren’t trying to gauge your clients’ confidence in their plans, I’d encourage you to start—because if they’re feeling low about things and they aren’t getting signals from you that you can provide a sense of direction, then I’d wager it’s likely they’ll go looking for a new advisor once things return to normal (whatever and whenever that might be).
So, my best advice, based on the conversations I’ve had with friends who are advisors, is to be direct.
Flat out ask questions like: “How confident are you in your financial situation? How confident are you in your financial plan? How confident are you in how you’re invested right now?”
I understand that everyone has a different communication style, but now is not the time to be vague.
Give clients freedom to be direct with you, and don’t mince words with your advice.
Even if you can’t stabilize everything going wrong in their life, you can at least be a single point of stability for them.
When we talk about what opportunities might come out of this pandemic, there is going to be a tremendous opportunity for advisors who communicate well with their clients to grow their businesses.
Not only through attracting people who are fearful and looking for certainty with their finances right now, but also by bringing in people who already work with advisors who don’t communicate well with them.
If you’re not in regular, weekly contact with clients right now, you need to get in front of them more.
Even in our almost completely digital world right now, the human connection you offer is still what sets you apart. One recent study found that investors who connect with a human, instead of using digital-only tools, have a satisfaction score 21 points higher than those who don’t.
The narrative about the economy, the markets, and the COVID-19 virus is changing daily —at a minimum. Don’t you want to be the person they get their financial outlook from instead of their favorite cable news station?
I’m not telling you to write a 3,000-word blog every week like Michael Kitces. But at a minimum, send a personal email. Even better, record yourself on video for a couple minutes talking about what happened, what’s going on, and how you feel about it.
Bringing that consistency and stability to your clients is more valuable than you can put a number on right now...but soon enough, you will be able to put a number on it when you get people contacting you who are dissatisfied with the communication they got from a previous advisor.
The thing about uncertain, unprecedented times is that they often require unprecedented behavior.
You might be taking on more of a role of business consultant than you ever thought you wanted.
If you’re a 401(k) specialist, it’s likely you have clients asking for help deciding if they need to eliminate their plan or not so they can put that money toward keeping their staff together a little longer as they ride out the current wave.
In normal circumstances, you’re talking to clients to figure out the best case scenarios. You’re talking about opening a company 401(k) and bringing more benefits to their employees. But right now, we’re experiencing the opposite side of those conversations.
We’re in the Upside Down. And that requires an adaptable skill set.
Being flexible means embracing change, even when it’s not change you want to embrace.
Sometimes, the right answer is “I don’t know.”
Now, maybe you want to qualify that...leaving things there doesn’t really do much to stabilize the mindset of the person on the other side of the table.
“I’m not sure, but I know what kind of research I need to do to have a more educated opinion. I’ll let you know what I find.”
You’re still being totally honest, but now at least you’ve got things pointed in a positive, rather than simply neutral, direction.
The fact is that nobody is Nostradomus. If you are...please don’t wait a thousand years for your predictions to be published in gossip magazines. You’d be a lot more useful to us all if you came forward right now.
But honesty’s not about making predictions. It’s about using the information you have in the moment to be transparent and straightforward.
Who knows what the market is going to do tomorrow. It could be up, it could be down.
And absolutely, it’s important to talk with clients about what the markets are doing and how the economy may look over the next several months, but does honesty mean putting your focus there?
Or is honest advice more relevant if you acknowledge what’s happening, and then help them redirect their attention to what they can control?
I think that more often than not, it’s the latter.
Final Thoughts About Confidence
Confidence is relative.
If I’m playing a game of soccer against my 5-year-old son, I’m at confidence level 100 that I’m going to beat him if I actually put forth any semblance of effort.
If I’m playing soccer against Pelé (possibly the greatest player of all time), my confidence level is going to be in the negative numbers.
But there are also exterior factors that can influence our confidence.
What if I’m playing that game against Pelé, and instead of a solo game we have teams, and David Beckham is my teammate? My confidence is suddenly a lot higher.
The reason it’s higher is because he’s proved himself. He’s a great soccer player. He’s shown that even in adversity, he can still play well.
Life is the same way. If we try to go through it alone, those confidence levels are going to waver wildly up and down.
But when we have people we trust next to us, they can help even out our confidence levels and stabilize those waves.
In an uncertain period of life like the one we’re all experiencing right now, that’s the role financial advisors play for their clients. You’re their David Beckham.
And you give them confidence by being upfront about what’s happening, using your knowledge to frame their worldview, and communicating extensively to help them ride out the waves.