Market Volatility Calls for a Collaborative Approach with Clients

Joshua BelfioreAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Market volatility provokes worry from investors. Advisors may be familiar with this: a client’s propensity to stray from the plan or sell at inopportune times. During times of uncertainty, advisors need to work with clients to keep them on track.

Collaborative technology is empowering advisors to not only ease client concerns but strengthen connections and improve client satisfaction. Research shows that client portal technology has a pronounced impact on advisor-client relationships.

Start deepening relationships by addressing clients’ financial anxiety

There’s one concept from the field of financial psychology that every advisor should understand during market uncertainty: loss aversion.

Loss aversion refers to having an emotional rather than logical response to a loss. It’s a phenomenon where the psychological pain of a loss is perceived as more severe than an equivalent gain. This is especially true for losses that are unexpected or cause an individual to feel threatened.

Clients may have a negative reaction during down markets. Of course, every client is different, but loss aversion is likely and because of this many clients may experience financial anxiety.