When Financial Advisors Go M.I.A.

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    The fourth quarter of 2018 once again reminded all of us that the financial markets can be very inhospitable places from time to time.  These are the times when investors often need the most assistance–managing their emotions, thinking logically, focusing on the long term instead of the short, and being aware of the opportunities that are being created in the midst of what can feel like endless chaos. The calming guidance and experience of their financial advisors can fill that need most urgently.

    Unfortunately, this is exactly the time when far too many advisors go dark.  Not only are they not proactively reaching out to their clients to help them make sense of what is happening like they should be; they aren’t even returning their clients’ phone calls!  They’re just missing in action. They’ve deserted their clients when they are needed the most.

    This is so pathetically egregious. It is nothing short of cowardice of the highest order. The truth is a chimpanzee could make money for clients when the markets are strong. The times when fortunes are made or lost are when the going gets tough and people’s resolve and resiliency is wavering, and that’s exactly when advisors should be out in front, providing calm and confident leadership—not cowering under their desks, avoiding their clients and waiting for the storm to blow over.

    What we’ve learned during many decades of helping clients from the financial trenches is that they rely on our optimism and reassurance. They need it during those times like a heart attack victim needs CPR. They need to be reassured that we are not going through something unprecedented, all hope is most definitely not lost, this time is not different and there is no reason to panic. They need to hear they will get through this, that market declines are normal occurrences, and here’s what we are doing to capitalize on the currently lower equity prices for you–namely buying low and increasing your equity holdings so when the markets eventually recover (and they always have throughout history), you, Mr. or Ms. Client, will actually benefit from the downturn instead of just surviving it.

    Advisors who are unable or unwilling to be at their post during the battles do not deserve to be in business, and certainly, clients deserve better. Much better! You deserve an advisor that is constantly communicating, stays connected with the rest of your trusted team of advisors, understands your financial situation, and can steer you away from the darkness and toward the light.

    Sure it’s hard to be an advisor when the markets are bad!  We sometimes get calls from clients who are very upset about the seemingly relentless declines in market values like we saw last quarter. It goes with the turf. Put on your big boy (or girl) pants and deal with it.  Answer your phone! Reach out to your clients to reassure them and let them know what you are thinking. Help them keep their heads and think rationally. What are they paying you for if they can’t even get that out of you?

    On Christmas Eve I had a client I have known and loved for fifty years tell me if I couldn’t stop him from losing money, he’d find someone who would. I knew he wasn’t really mad at me, and that it wasn’t personal. As a recent retiree, he was understandably worried about his future security, and needed his friend and advisor to help him through the mist of darkness that was enveloping him and everyone else during that dark period. If I took his message personally and reacted defensively instead of with empathy, what good would I be to him or any other clients under similar circumstances?

    Being a great advisor is much less about being the smartest financial tactician (though that is also important) and more about keeping cool and knowing how to help people avoid blowing themselves up during times of excessive optimism as well as excessive pessimism.  Just like I had to reassure my long-time friend on Christmas Eve, we also had clients who wanted to get more aggressive during late September, just as the markets were reaching new all-time highs. We were able to successfully guide them to stay the course and not increase their equities. In recent days, after the Dow and S&P 500 dipped ever so briefly (like minutes) into 20% losses from their September highs, we contacted them again and gave them the green light. Not surprisingly, what seemed more attractive when prices were 20% higher now don’t seem as interesting while stocks are depressed in value, so we start educating all over again.

    The bottom line is you should never, ever allow your financial advisor to go dark on you. Similarly, if you are a tax, insurance or legal professional and you have seen your clients victimized in this way, make sure they know they do not have to accept that kind of behavior! They deserve so much better!

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