Keeping client trust after a market fall

Aug 29
3 min read

Introduction

Markets fall sharply. Some clients telephone within days, some go quiet, and a few instruct changes they will regret. The adviser spends a fortnight explaining volatility to people who are frightened and not in a position to absorb an explanation.

What determines how this goes was largely settled months earlier. Clients who were told at the outset that falls of this magnitude occur, who understood what their plan assumed, and who hear from their adviser before they have to ask, behave completely differently from clients encountering all of it for the first time. The difference in behaviour is stark and it was determined months earlier.

1. Keeping client trust after a market fall begins long before it happens

The preparation is the work.

Explaining at outset what a bad year looks like in actual money, and confirming it at each review, is what makes a fall an expected event rather than a shock. This is a conversation, not a risk questionnaire.

2. Make contact before they contact you

The single most valuable action.

A message within days, acknowledging what has happened and what it means for their plan, changes the entire dynamic. A client who has to telephone their adviser during a fall has already begun to doubt the relationship.

3. Talk about their plan, not about markets

The reframe that helps.

Whether they are still on track for what they wanted, and over what timescale. Market commentary is abstract and unreassuring; the effect on their own objectives is the question they are actually asking.

4. Express it in money and in time

Percentages do not land.

What has changed in the amount they hold, and whether that alters when they can do what they planned. Clients think in outcomes and dates, and a portfolio percentage tells them very little about either.

5. Do not minimise it

Reassurance that sounds hollow does damage.

Acknowledging that the fall is significant and unpleasant, and then explaining the position, is more credible than describing it as a normal correction. Clients who feel their concern was dismissed remember it for years.

6. Have a position on doing nothing

The most likely recommendation.

Where the plan remains appropriate, saying so clearly, with the reasoning, is advice rather than inaction. Clients need to hear that a decision was made rather than that nothing happened.

7. Deal with the ones who want out

Carefully and on the record.

Where a client instructs a change against advice, the conversation and the reasoning need to be documented thoroughly. This protects both parties and it frequently slows a decision long enough for the client to reconsider.

8. Contact everybody, not only those who called

Silence conceals the risk.

Clients who go quiet during a fall are frequently the most worried. Systematic contact with the whole book, prioritised by vulnerability and by who is closest to needing their money, is what catches them.

9. Follow up when it recovers

The step that consolidates the relationship.

Referring back to what was said, and what following the plan produced, converts a difficult period into evidence of the value of advice. Advisers frequently communicate during the fall and never close the loop afterwards.

Pay particular attention to clients drawing an income and those near a planned date, because for them a fall has immediate consequences rather than theoretical ones. Their conversation is different and it should not wait for a general communication.

Conclusion

Do the work before the fall, because that is what determines how clients respond to it.

Explain in advance what a bad period looks like in actual money, make contact before clients have to ask, discuss their plan rather than the market, express changes in money and in time rather than percentages, avoid minimising what has happened, present holding course as an active decision with reasoning, document any instruction given against advice, contact the clients who have gone quiet, prioritise those drawing income or near a target date, and close the loop when markets recover.