The author of this article argues that financial advisors should protect clients from themselves and not let them take rash decisions that could hit their future wealth.
The looming US presidential election is already prompting investors and wealth managers to reshuffle portfolios, as reported here. Another task is for clients not to let their own politics lead them to make bad investment decisions. This news service also hears that private client lawyers are being inundated with enquiries about estate planning, taxation and philanthropic giving ahead of the year end. A change of administration and shift in Congress could force a number of changes. But as observers of politics know, opinion polls and other indicators must be handled with care. These are uncertain times. (Here is a recent article about how clients should position their portfolios.)
To consider how wealth advisors ought to speak to clients in this period is Alana Kohl, president of AdvisorPR, a public relations firm that focuses on the financial advisory sector. The editors are pleased to share these insights and invite responses. The usual editorial disclaimers apply. Email firstname.lastname@example.org and email@example.com
No matter who wins the 2020 presidential election, roughly half of the population is not going to be happy.
Excluding factors like your geographic location or targeted niche, it is likely that your client base will fall under this split as well. Politics these days is emotional for many, and emotion can lead to rash decisions.
As their trusted financial advisor, it’s on you to keep them calm and their emotions in check. It is vital that you are communicating with your clients now and regularly throughout the election and after, until the dust settles again. Here’s how.
1) Take clients’ temperature
If you don’t know already, you need to reach out to your clients to find out how they're feeling about the economic environment and upcoming election.
What are their individual concerns tied to the outcome of the election? You can call each one to check-in, or you can create a survey for them to respond to individually. In nationwide surveys of investors and their views on the election, some see maintaining the current political leadership as a positive for the economy and markets while others see a continuation of the presidential office as having dire consequences for their financial future. Understanding the specific fears of your individual clients can help you to be a better communicator with them as the election cycle unfolds.
2) Segment your clients
There are going to be three mindsets that you will need to address: those who fear that Trump will clinch the nomination, those who fear that Biden will win, and those who won’t be happy either way.
Each type of client is going to need a different type of communication to feel confident about how you will manage their savings and investments going forward. By understanding which of your clients are scared or optimistic pending the results of the election, you'll be able to tailor your approach better.
3) Gain clarity on their specific concerns
What concerns are your clients most alarmed by?
For example, high-income earners may be concerned with the proposed tax increases by Biden, while Biden supporters may be wary of a continuation in political and social unrest and its impact on the economy if Trump were to continue in office. Again, this will vary depending on your geographic location and client base, so it’s important to get this information straight from your clients versus any national polls. As you gather these concerns, create a comprehensive list under both the “Trump Wins” scenario as well as the “Biden Wins” scenario.
4) Craft your responses
How will you respond to the concerns of each client-type?
It’s important that you develop messaging for how you would address each point, as well as identifying any potential action that should be considered to help ease those concerns. This may require some research at your end ahead of time so you have clarity on how proposed plans would impact your client’s overall financial situation.
You can create a simple spreadsheet with the columns “Concern”, “Recommendation”, and “Action(s)” in the header. There may be multiple actions that you would recommend or none at all. Even if there is no ‘action’ to take, your client would still need to know that you’ve considered it. Simply document what you would need to follow up, with the reassurance that the planning you’ve done up to now has positioned them well regardless of the outcome.