When stocks go down, communication from your financial advisor should go up.
However, many financial advisors don't know what exactly to say to clients during times of extreme market volatility - because they either don't want to alarm them (don't want them over consuming financial news media) or they don't want to beat a dead horse (how much is too much communication? ).
How many ways can you say the same thing over and over again - "just stay the course?"
To help, I've got 4 communication strategies that do work that I suggest you utilize if you are a financial advisor right now.
- Remember - No one fires their advisor for communicating too much. But they do for not communicating ENOUGH.
- Put "this time" into historical context (CHART: Dimensional Fund Advisors Bull vs. Bear)
- Use visuals To communicate more effectively (CHART: Bank of America )
- Help them remember why they hired you. You help prevent emotional based decisions. (Equity Allocation Change if S&P 500 falls 10-20%) CHART:Andrew Lo, Alexander Remorov and Zied Ben Chaouch, authors of the January 2019 study Measuring Risk Preferences and Asset-Allocation Decisions: A Global Survey Analysis
Related: 5 Tips for Client Communication During Times of Volatility