The Law of Handholding is very simple. It states:
When bad or unsettling news happens, clients and prospects need to be told what to think…and quickly.
Otherwise, both will become someone else’s clients.
You see, while market volatility might be unpleasant for investors, it can be a godsend for you. Don’t believe me? Then check out what History has to say.
Come back with me to autumn of 2001. The nation – indeed, the world – was still coming to grips with the 9/11 terrorist attacks. This was especially true of financial advisors, as noted by a writer named Thomas Kostigan.
On November 20th, he published an article in CBS Market Watch titled, “Financial advisors ran, hid on September 11.” Among other things, Kostigan found that less than one in five advisors called their clients during the period right after September 11. I can believe that. When the markets tumble, no one wants to talk to an angry or worried client.
As a result of not communicating, as many as one third of all the clients who were not contacted by their advisor looked for someone else.
Kostigan found the same phenomenon occurred after the stock market crash in October of ’97. Back then, only 18.3% of advisors called their clients. Once again, many of the clients they didn’t contact got fed up and started looking for someone else to help them reach their financial goals.
I imagine that if Kostigan were to update his article, he would find similar data in 2012… and again in 2018… and for that matter, early 2020. And probably today.
Now, the immediate conclusion is obvious. During times of market volatility, like right now, it’s crucial that you reach out to your clients. Otherwise, you may lose business.
But now look at it from another angle. According to Kostigan, as many as one third of all uncontacted clients looked to switch to another advisor after 9/11.
That’s tens of thousands of investors. Frustrated. Unhappy. Looking.
Those are your prospects.