Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Dear Readers,
With the difficult conditions of the past few weeks, I want to write about crisis communication with clients. Advisors, large and small, are dealing with upset clients who are fearful about their portfolios and what the future holds.
We have witnessed what not to do, which is tell people to “calm down” and minimize their worry.
The best crisis communication is to hit the issue head-on and acknowledge the outcomes. Here are five tips for managing communication:
1. Being proactive is critical. I work with many advisors and I have seen only a handful of emails come through addressing the crisis and letting the email list know what the firm is doing. While you might hope clients realize you are head-down working on their portfolios and making good decisions on their behalf, all clients hear is that nothing is happening. No news is not good news in times of crisis. No news stokes fears and lets clients think you have something to hide. Create a communication campaign to let clients know, step-by-step, what you are thinking and doing.
2. Be transparent. You don’t want to sugar-coat what’s happening, minimize the importance or tell clients it is better than it really is. Let them know you are working diligently to figure out the best approach. It’s fair to tell people these times are unprecedented and it might be day-by-day to figure out what to do. You can reiterate this is a long-game and not to focus on the daily bruising, but affirm the natural fear and concern an investor has during this time. Don’t minimize their emotional response. Let them know you respect it and appreciate it and will work hard to keep their trust in all the ways you know how.
3. Do some “what if” scenarios with your team. Of course you are doing this in the portfolios you run and within your models to figure out how to respond to the market changes, but do it as a business. What if your most fervent competitor makes a mistake and there is opportunity for you? What if your junior advisors could take on more than they have been doing to date? What if you could change the way you traditionally have communicated with clients? What if you lose X% of clients? Examine both positive and negative potential outcomes. It can be inspiring and confidence-building to your team to think about the possibilities and their reactions to them.
4. Carve out those most vulnerable, most important, or most difficult clients and have a personal communication plan for them. Every one of your clients should be receiving proactive communication. But allocate time to call certain clients directly and talk through your strategy for their portfolios and the next steps you will take. It’s helpful to have a segmented list of clients in advance to do this; if you haven’t done that before there is no time like the present. Know who these clients are and get to them before they get to you.
5. Don’t ever tell your clients – or your team members – to “calm down.” Help them manage the stress associated with these times. One of my favorite sayings and a plaque I have on my wall is, “This too shall pass.” Those are four simple words, but important to remember in bad times and good ones too. You can’t tell your clients and team members to stay calm, but you can practice steps so that you maintain a calm demeanor and instill confidence in those around you.
If you weren’t anticipating the craziness we are experiencing, and you didn’t have a plan already in place, you don’t want to make the mistake going forward. The markets are unpredictable, the world is unpredictable. Having a disaster recovery plan isn’t enough, you want to have an established crisis management plan in place and be ready to initiate it when needed. Letting clients know they are in it for the “long-haul” is fine when markets perform well, but being prepared for exactly the opposite and having a plan of action to communicate effectively with clients is critical.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. The firm also founded and manages the Advisors Sales Academy. She is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
Read more articles by Beverly Flaxington
Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here. 
