What did you say?
You know how this goes. Markets decline, account values drop, clients get nervous, call you for advice, and now it is up to you to provide comfort and reassurance. What do you say? You probably have some well-rehearsed words of wisdom, but here is my question. Are those soothing, comforting words even true? And do you have any idea what a savvy client might be thinking when you say these things out loud?
Here are some common comforting phrases that we all have probably used in some form or another in our careers (and hopefully never will again).
What we say: “It’s just a paper loss.”
What our client thinks: “Well, I think ‘paper loss’ means I just lost a lot of money. By the way, you never told me not to get excited when my accounts went up because it was just a ‘paper gain.’
What we say: “Stocks will outperform in the long run.”
What our client thinks: “Outperform what? CDs? Bonds? Real Estate? Commodities? Everything? How long is the long run? Will I be able to enjoy that performance? I would like to know because the truth is, in the long run, I’ll be dead”.
What we say: “Now is a good time to buy.”
What our client thinks: “Really? It does not seem like you recognized a good time to sell. How can I be sure you recognize a good time to buy? Has there ever been a single day in your entire career that you did not accept money from a client because you thought it was a bad time to buy?”
What we say: “You cannot time the market.”
What our client thinks: “Then how do you know it is a good time to buy? Are you saying that there is no exit strategy? Are you saying that I should be 100% invested 100% of the time? What are you saying?”
What we say: “Most analysts are predicting…”
What our client thinks: “How often have they been right? Did they predict the last recession? How many respected analysts disagree with your analysts? Do they have to look me in the eye if they get it wrong?”
What we say: “I understand how you feel.”
What our client thinks: “I DOUBT IT!”
What we SHOULD say: “It is never enjoyable to have a meeting to discuss the losses you are currently seeing in your portfolio. I have, however, prepared a detailed analysis of each holding that lost money. Some are good companies that we should keep, and I will show you why. Others have turned out to have problems that are unlikely to be fixed in time for them to be useful to us. We will probably want to get rid of those. I do not know what you are feeling in the pit of your stomach right now, but I do know what your objectives for this account are, and we are still on track (or, we can get back on track). If this downturn is causing you to re-think your objectives, then we need to have that discussion today.”
What our client thinks: “Well, I am not happy, but my adviser at least seems to understand what is going on with me and with my investments. At least they seem in touch with reality and are not trying to sugar-coat anything. I will at least listen to the advice and see if it makes sense to me.”
We must stop saying meaningless (and often erroneous) things. If our clients ever think we are trying to deflect responsibility for our recommendations, we lose.
And so do they.
Premium gift for you for registering for my newsletter
I am a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money.
Interested in additional information? Register for my FREE bi-monthly newsletter, "Layin' it on the line." It contains information that other people have found beneficial. I will never sell your information.
For registering, I have a Premium Gift for you.
Our 15th edition, “Safe Money Book” a $20 value
77,000 copies in circulation
Learn the basics of a Safe Money approach to investing.
And it is FREE with your "Layin' it on the line" newsletter