How can advisers reassure panicked clients?
Advisers should reiterate their investment philosophy and highlight their experience as a financial professional when dealing with panicked clients, according to Lonsec.
Market volatility, rising interest rates and inflation and underperforming sectors had contributed to clients’ being concerned about the potential impact on their finance and questioning their adviser.
This included concerns about whether they should move assets to cash and the value of the advice they were receiving.
Lonsec noted clients who had moved to cash during the Global Financial Crisis had locked in an average loss of 8.5% and many had missed the market rebound.
Brendan Tully, managed account consultant at Lonsec, said: “It can be challenging in these conditions to feel confident about your advice is delivering value to your clients.
“Clients invest for a purpose which your advice and strategy is designed to deliver. Your value in assisting clients stay true to that course and not falling into an irrational decision cycle should not be underestimated.
“Like advisers, my GP is a professional that has my long-term interests in mind, in their health. I am not convinced they would call my decision to reduce my prescription by half or my decision to cease all medication for an extended period for a rational choice.”
A way to encourage rational decisions by clients was to have a clear investment philosophy as a reference point to provide clarity in times of market upheaval, which it was then important to stay true to.
“Be clear in your investment philosophy, be great at revisiting goals, be good at assisting your clients in staying the course and have confidence in the resilience of your advice. Effective strategic advice creates immediate and long-lasting value. Its positive impact will linger long after the market cycle has shifted.”
AUTHOR
Laura Dew
Recommended for you
Following an extraordinary general meeting today, Dixon Advisory parent company E&P Financial Group’s shareholders have voted on its proposed delisting from the ASX.
While overall financial adviser numbers have dipped below 15,500 this week, Rhombus Advisory is experiencing growth and approaching 500 advisers in its ranks.
Iress’ Xplan continues to dominate the financial planning software market with a multitude of uses, according to Netwealth research, despite newer players battling for a piece of the pie.
ASIC has shared the percentage of breach reports related to financial advice in FY24, noting increased reporting by smaller AFSLs.
By having them sign 45 documents to confirm our fee?