How advisors can manage clients’ emotions in a time of crisis

We’re living in a historic moment. The COVID-19 global pandemic has led to months of stock market volatility. That, in turn, has had an impact on investors’ emotional state, resulting in increased stress levels, fear of the future and aversion to risk.

During times of crisis such as these, people seek a strong leader they can trust – someone who understands their needs, helps them navigate the storm, sheds some light on the uncertainty and guides them to safety.

As chaotic as these situations can be, they’re also a powerful opportunity for financial advisors to step up and serve their clients, potential clients and centres of influence effectively.

But many advisors are trying to figure out how to manage clients’ emotions. Specifically, many clients are worried because of the stock market volatility or loss of employment and income. How do you, as their trusted advisor, guide them through that? What do you say? And how do you say it?

Many advisors try to be informative and rational when talking to their clients, but if you really want to connect with them and make sure you’re trusted, it’s important to be empathetic of their emotional state before presenting them with recommendations and opportunities.

Here are five ways to manage your clients’ emotions during a time of crisis:

1. Be aware of the emotional gap

People are emotional beings. We’re all wired to seek emotional responses and our behaviours are driven by our emotions.

If a client is really low on the emotional scale – feeling fearful, in despair or powerless – and you come to the conversation as optimistic or hopeful, the emotional gap between the two of you is far too great. You won’t be able to connect with your client and your messages of reassurance won’t resonate.

2. Create doubt in clients’ beliefs

One way to narrow that gap is to provide examples of times that were similar to our current situation, such as another market downturn or other events in which clients felt similar fear, despair or powerlessness. Then, open their mind to the possibility that this situation might not be as negative as they’re seeing it right now.

The brain’s role is to keep us safe and alive. As such, it seeks out worst-case scenarios and identifies threats. When you create doubt in their beliefs, you help them get out of their negative thought patterns and see that there’s a light at the end of the tunnel.

3. Provide analogies to the current situation

Analogies are a great strategy to refocus emotions. For example, you can compare current events with a terrible storm. When we’re caught up in it, we have no way of knowing what comes next, but, inevitably, there are always blue skies ahead. Recall the global uncertainty on the afternoon of Sept. 11, 2001. No one knew what would happen after those devastating events.

This approach helps the brain diffuse the uncertainty of current events by showing us that this situation isn’t as dire as we think it is right now. We’ve been through similar awful situations before and survived them.

4. Show clients the ‘before and after’ of previous crises

At this point, your clients’ emotional state is diffused. Now, you can bring rational information to appeal to the rational part of their brains. How were things before the global financial crisis and great recession? What did you do? What happened after? What opportunities came out of it?

That discussion helps the brain make a comparison of what happened then and what’s happening now. It opens clients’ minds up to your ideas, suggestions and recommendations – even if your recommendation is to do nothing and stay invested.

5. Help clients take action

By following these steps, you’re showing empathy – the ability to step into someone else’s shoes and leverage that understanding so your advice will ultimately be helpful to them. From here, you’re in a position to offer recommendations, suggestions or opportunities.

Here’s a great sentence you can use at this point in the conversation: “In every market downturn, there are opportunities. My role is to seek these opportunities for my clients.”

Anchor your conversation on your clients’ own dreams and aspirations: “Is your question whether you’ll be able to retire in three years as you had planned?”

Remember, after all, that this crisis is an opportunity to rise up to the occasion and step into the role of the leader and trusted advisor your clients and potential clients are desperately seeking.

Sara Gilbert, business strategist and mindset coach with Strategist Business Development in Montreal, helps financial advisors implement tailored business-development strategies to grow their businesses and to attract, grow and retain clients.