It was one thing, of course, talking through the potential portfolio losses, in the comfort of an annual review – quite another to starkly report back actual losses to a client, running into several thousand or even tens of thousands of pounds.
Below, four advice firms relay typical conversations they have had with clients, during the nadir of this year’s market losses in March against the backdrop of the global coronavirus crisis.
Serena van der Meulen – Financial adviser, Van der Meulen Associates Ltd
“Conversations have totally depended on the client. Clients who are experienced have not been overly concerned, because they have experienced market drops before. But clients who are less experienced and who have only been invested a few years – it doesn’t matter how many times you discuss volatility, loss, capacity for loss. All those things. Until they actually experience a loss, it’s difficult and terrifying for a client. We all knew there would be a drop in markets in 2020, but, of course, nobody knew the drops would be as dramatic as they were.”
Nick Ryan – Financial adviser, Yellow Bear Financial Consultancy
“In 2008, I had clients ringing me up and panicking and crying – so from that moment I made a real point that I would have a doomsday conversation with all clients. Whether it is those conversations or that clients are more self-educated today, it seems to have worked. So far in this crisis I have only had one client – a new client – who has had a real panic and in his defence he had literally just begun to invest and in only a week or so he was down significantly.
“Of course, I’m not happy about the situation as their adviser and they’re not happy as my clients. But I am pleased with how people have reacted – I don’t think I actually could have asked for a better general reaction.”
David Owen – Wealth Director, Lifetime Connect
“As a business, we have been doing lots of coaching with advisers before all this and they, in turn, have been coaching their clients. We have been warning that, at some point in the future, things will take a downturn, but obviously we weren’t expecting anything quite like we saw this year.
“Over the 53 advisers that we have, I have only heard of three cases where clients have wanted to move to more secure assets and of those, only one executed and two perhaps saw sense. When you consider you’re talking about £1bn of assets under management that we have, that’s pretty good.”
Lee Whiteside – Financial adviser, Plan4Life
“Clients, of course, have been worried, because we saw pretty significant losses, even in quite low risk portfolios. But there’s been no point avoiding client phone calls. It’s about reiterating messages and revisiting objectives. This is about medium to long-term investment and markets will recover. In short, it’s been a reassurance piece as much as anything.
“Clients who have been most worried are in drawdown – and for people in that situation, it might be a case of looking at it again and having a conversation saying, ‘You might want to readjust expectations of the level of income you want to take from your portfolio’. But overall people realise the situation we are in. I think they want to pick the phone up and hear your voice saying, ‘Look, don’t do anything. The best thing is to just hold steady’. At the end of the day, that’s what people pay advisers for.”
If you are not already a Dynamic Planner user – and would like to find out more about how we can help you and your firm – please get in touch.
