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How to Guide Your FAs through Turbulent Times

How to Guide Your FAs through Turbulent Times

As the market volatility that re-emerged this past August continues, advisors in your branch are likely feeling the kind of pain and anxiety they did at the height of the financial crisis in 2008. (In August, amazingly, we found that many clients of FAs we spoke to were not worried and keeping the course.) But, FAs do tell us that clients are paralyzed, not wanting to make any investments. Investment company institute mutual fund flows show that retail investors have been pulling money out of domestic equity funds for five years running. So many investors have lost faith in financial institutions and “big” business in general -- (the “Occupy Wall Street” movement is just one indicator) -- that clients’ fear is growing.

What’s an FA to do? They’re still responsible for helping their clients make sound investment decisions that will help them meet their goals. And, branch managers must guide and motivate FAs to keep a positive attitude. While doing so can indeed be challenging in times like these, industry experts says that there are a number of things that can make a real difference in your advisors’ lives and, consequently your own. Below are some tips:

Communicate with your team frequently. “Nothing is more important,” says Paul Werlin, founder and president of Human Capital Resources, a financial services industry consulting, training and executive search firm. “Keep those lines open,” he says. “Let them know you understand what they’re going through and that you’re there to help.” Werlin, who was once an assistant branch manager for EF Hutton, suggests stepping up both one-on-one meetings and group meetings with your FA’s “so they know they’re your priority and have your undivided attention. And focus on sharing good ideas and building rapport to foster a can-do attitude,” he says.

Stay positive. “Stress to your advisors that this is a great opportunity to show what they can do,” says Philip Palaveev, president of Fusion Advisor Network, an independent financial planning group with member firms nationwide. “This is the time when people need them the most—just as doctors are most needed when people are sick. In 1999-2000, the market was great,” he recalls, “and there was an explosion of self-directed investors. Then, the [tech] bubble burst, and these folks realized they just couldn’t do it themselves.”

Crises are actually great times for advisors to show what they can do, Palaveev says. “Studies have shown that, when the market is doing well, less than 3 percent of investors are unhappy with their advisors. But, in bad times, we’ve seen that number soar to 30, 40 or even 50 percent. So, if an advisor is working well, he’ll have an opportunity to gain more business.”

Educate. Offer historical perspective, especially to younger advisors who often also have younger clients, says Chip Roame, Managing Partner of Tiburon Strategic Advisors, an industry research and consulting firm. “Providing detailed accounts of other events like the market crash and oil crisis of 1973 [when the DJIA lost 45 percent of its value over the next two-years], Black Monday [October 19th, 1987, when the market was roiled by its largest one-day percentage drop in history, 22.6 percent, and took two years to recover], and the 2000 ‘Dot-com’ wipeout [which, combined with the September 11 attacks, gave that crash the longest recovery time in history, 999 days] can add critical perspective that may be lacking in younger advisors,” he says. or--

“Offer to host seminars on these topics for your younger advisors. Offer to host them for clients,” Roame says. Helping advisors compose newsletters and other things to illustrate and communicate to their younger clients how investors got through these difficult times can be incredibly powerful, he says.

Lead by example. It’s easy to get down when sales are down, FA’s are worried, and management is pressuring you for results. But it’s imperative not to give in to all the negativity around you, Werlin says. “Confidence, focus and determination are just some of the things your team is looking to see in you—and they are frequently contagious.”

Give constructive feedback. Seems obvious, of course. But experts agree that listening to your team’s concerns, fears, and suggestions is one of the most important things you can do in volatile markets. Still, make sure the feedback your offer is “constructive”-- not negative. “Don’t tell an FA he’s not working hard enough,” says Werlin. “Instead, show him how putting in more time will lead to better results.”

And, be open to feedback from your team. “They see things from a different perspective, which can help you make better and more informed decisions,” Werlin says.

Set realistic goals. While it’s important for every manager to have a comprehensive business plan, you must adapt it to changing circumstances, says Werlin. “Review it every month. Remember, a business plan with value is a ‘living’ document that is relevant to today’s realities, not those that were present six months ago.”

“The average financial advisor is among the nation’s top 5 percent of earners,” adds Palaveev. “So, if it were an easy job easy, everyone would be doing it. However, now is the time advisors can see their skill, knowledge, judgment and experience pay off—if not immediately—then down the road.”

Avoid radical change merely for the sake of change. Desperate times don’t always call for desperate measures, Werlin says. “When you’re under stress and facing critical challenges, it’s more prudent to make smaller, incremental changes that adapt to current circumstances, while hopefully keeping you on track with your business plan,” he says. Radically altering compensation plans, or kicking off massive new marketing programs- for example— will likely create even more confusion, and there’s no guarantee that they’ll even work, he says

Seek support. Many managers have gone beyond just talking to their peers on an ad hoc basis and joined formal groups of managers who have regular meetings (in person and on the web) to discuss issues, opportunities and strategies. And, your product sponsors also have ideas and programs to support you, our experts say. Most should be happy to help you, since they stand to benefit as well.

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