WealthManagement Magazine
Stock Doc: Client On The Couch

Stock Doc: Client On The Couch

Money is emotionally fraught, especially in times of crisis. Sometimes, financial advisors need to think like therapists.

Has the crisis passed? It's hard to say, but now is no time to let your guard down. In a competitive landscape where developing investor trust and client-centered service is of paramount importance, advisors must be ready to go into “Code Red” mode when clients get emotional about the markets. If the advisor is not assertive and confident, the client may make an irrational bad call and destroy all of your hard work from the past year.

I remember with great clarity a day in the middle of May when I was barraged by crisis calls from some of my most frenzied advisors. On this day, the stock market had its single worst one-day plunge in more than a year. I could hear hesitation in advisors' voices as we spoke and they all seemed to have an “Oh no, not again!” attitude about the markets and their clients that night and following morning.

One such advisor named Ned called me on my cell phone that afternoon to reschedule our evening appointment in my office, making it a phone coaching session. His clients were rattled by the 376-point dip in the Dow early that afternoon, and he didn't feel he had the time to come in person. He reported that his clients were calling from all over the country, questioning both him and his staff incessantly about their investment strategy in the face of Europe's continuing debt crisis and the threat of a crackdown on Wall Street looming in the near future. He noted that they “still hadn't learned from the last market collapse” and that “a large percentage of them were already second-guessing his conservative investing formula for them.” Ready to pull chunks of money out of their portfolio, Ned had to channel all of his inner resources to keep them on track that afternoon.

In order to weather this unexpected storm, Ned needed to follow the same strategy that psychologists adhere to when trying to defuse a crisis situation with their clients. I answered Ned's call that afternoon, and here are four successful crisis management solutions that I offered him:

  1. Stop, Breathe, and Take Your Own Emotional Temperature: Despite his real belief that things could get worse with the markets, Ned needed to stop, take a deep breath, get centered, mollify his own fears and project a veneer of calm. To do this, he stayed focused on past successes and the strength of his client relationships and reassured himself that he needed to be strong and positive for his clients.

  2. Create A Plan: Clients who seek a therapist are reassured when they can put their trust in someone who appears to have a plan. Similarly, in crisis, clients need a financial advisor to reach out proactively, letting them know he is watching their money and is poised to turn this into an opportunity for them.

  3. Listen Up: Most individuals in a therapy relationship are looking for an objective and empathetic party to listen to what they are feeling. In a similar way, financial advisors like Ned need to listen to the fears of their fragile clients before they can offer answers. As much as they might prefer to simply dictate an investment strategy, an advisor must let the client talk freely about his worries and negative thoughts first.

  4. Validate: After listening comes validation, which might go a little bit like this: “I know that you are worried right now. I hear it in your voice. Please be reassured that I have the experience and ability to help you through this rough time. Let's get through this together.” Such a positive statement will stabilize your clients, who will be more apt to listen to the confident directives that you will offer them regarding your investment strategy after such validation.

As you try to relax for the rest of the summer, please remind yourself that your client-advisor relationship is something special. Like a psychologist, you must always make your clients feel that they can reach out to you in a crisis. This is the edge that can make you a very sought-after advisor and can help bring you more referrals for the colder winter months.

Writer's BIO:

Dr. Alden Cass
is a New York City-based clinical psychologist and performance coach for Wall Street advisors, traders and bankers. For more info visit competitive-streak.com.

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