Managing Client Expectations in Uncertain/Unpredictable Markets
Bull markets are always followed by corrections; corrections are always followed by markets that go up or maybe sideways, but eventually they go up. At least that is what the history of the markets have shown us. It seems like we know what will happen, just not when.
Hence the conundrum that faces everyone responsible for investing money for their clients today: When will the market correct? By how much and for how long? When will it turn around and go higher and then by how much? What should be done now?
In the midst of all this, the average client will experience a wide range of emotions from euphoria to fear. How they feel at any moment in time depends on what they see in the media or hear from friends or their advisor/banker. If clients let their emotions drive their decisions, they will likely be wrong and lose money. Taking advice from an advisor/banker who is working in their best interest will provide them the highest probability of success. Long term investment success will only happen when an advisor/banker does not deviate from their strategy even when their clients are pressuring them for better returns.
Being a good advisor/banker today has gone way beyond relationships and selling their firms products. It’s about holistically managing a client’s wealth and being a good counselor. And yet, today it seems like what we hear the most from clients is their desire for returns and not about the risk of investing in an uncertain world. It’s the performance conundrum.
Every advisor/banker needs to take time on a regular basis to step back from the day-to-day and look at how they are managing their clients’ money, make sure they are confident in how they are doing it, and ensure that the right message is being consistently communicated. As we move through whatever the markets deliver in the next couple of years, maintaining a sound investment discipline and being a good counselor will be the key to retaining and growing clients wealth.