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Five Steps for Getting Ahead of the Next Recession

Correction is coming. Get your message straight.

Benjamin Franklin’s quip, “An ounce of prevention is worth a pound of cure” should be the mantra for financial advisors, especially in today’s world.

As you’re well aware, our historic economic expansion is poised for a correction, therefore, in the spirit of Ben Franklin, consider the following five steps to help you get ahead of the next recession.

Create Your Narrative. Channel Warren Buffet and develop your “next recession” talking points. This doesn’t mean you’re becoming Chicken Little screaming “the sky is falling,” it means you’re proactive, studying 2001’s recession and its 9 percent S&P decline and the 7 percent S&P decline in the recession of 2008. In effect, you’re creating succinct talking points based on historical data. 

Equip the Entire Team. You’ve probably already had some of your affluent clients ask you about the market correcting, the next recession, taking profits, etc. You want every member of your team conversant in the talking points you’ve established in the first step. It’s important that everyone is viewed as a knowledgeable worker capable of answering questions and addressing concerns. Make sure whoever happens to be communicating with a client at any given time is on message and able to instill an air of professional confidence.

Schedule “Getting Ahead of the Next Recession” Reviews. There’s a tendency for some financial advisors to let “sleeping dogs lie”—avoid what they perceive to be an unpleasant conversation with clients because they don’t want to stir things up. This is a classic mistake. These financial advisors find themselves in a reactive mode, playing defense, when the proverbial “s…t hits the fan.” 

As much as serious market fluctuations make news and can create client angst, our research is quite clear on what today’s affluents consider of primary importance:

  • investments meeting their expectations
  • protection from downside risk

All of this translates into their primary concern—their ability to maintain their current lifestyle throughout their retirement years. 

This is why the “Getting Ahead of the Next Recession” review theme should involve a thorough review of their financial plan, making certain they’re on track with the goals that have been established, adjustments (if any) that might be necessary and explaining what to expect before, during and after the next recession. Essentially, here’s where you manage expectations and demonstrate leadership.  

Take Systematic Action. Starting with your top 25 clients, this review should be executed with systematic precision. You might want to think of this as a fire drill where everyone must participate, including both spouses. Your top client interactions should be handled face-to-face whenever possible. If they’re snowbirds, schedule your review as a conference call—video format if you have the capabilities. 

Remember, you’re the expert, the confident “client-centric” knowledgeable advisor. Not only will this proactive approach provide your clients with more peace of mind, it’s likely to stimulate word-of-mouth influence, especially if you, dumb like a fox, suggest that if they ever hear of a family member, friend or colleague expressing concern over the market, simply ask, “Has your financial advisor reviewed your financial plan recently?” 

Get Social. The aforementioned steps have the most positive impact for financial advisors who have established an emotional connection with their affluent clients. Yes, you’re an extremely professional financial advisor, but when you’ve taken the time to develop a personal relationship with your affluent clients they:

  • Pay more attention to your communication
  • Follow your advice
  • Are more likely to consolidate assets
  • Recommend you more often.

Please don’t wing these steps. Think of it as your version of a fire drill. It will provide peace of mind and very possibly generate the type of WOM influence that stimulates those unsolicited referrals.

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