Three simple ways to make volatility your ally

Joe Duran offers three simple ways to make volatility your ally by preparing clients now for the next big market drop. They'll thank you later.
NOV 19, 2013
None of us like market turbulence. Our clients deplore it and our employees can be frustrated with calls about it. But just like everything else in this world, there may be a positive in the midst of the negativity. Truth is, most of our clients think we earn our money when we are making them money, but those of us who have been around through multiple volatile markets know that we really earn our money when times are tough. Winston Churchill had a wonderful expression: “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Here are three ways to help turn the next big decline in the markets into an opportunity. 1. Prepare for the inevitable. Believe it or not, we have been through a period of relative calm since 2009. In fact, volatility has been historically low, and we can all be lulled into complacency. Prepare your clients in advance for a possible decline in stocks. Doing so when things are good allows you to refer back to your warnings and highlight your preparations. Most of your clients want you to be their guide and point out the blind spots they might not see or be prepared for. 2. Control the controllable. Remind your clients that neither of you can control the markets. You are there to help them control their reaction to the markets. That can justify not just your fees, but the real value you add to them and their families. Too often, advisers act as though they are responsible for market behavior that they have no control over. It's a great time to remind clients what you can do and what you can't do. 3. Communicate. Communicate. Communicate. You can never overcommunicate with clients, especially in tough times. In fact, that's when they want to hear from you the most. You should be calling, writing and sharing thoughts on social media. The truth is that the phone gets very heavy when markets are rough. Most of our clients have other advisers. In fact, the average client has 2.6 advisers. You can bet, more often than not, the other 1.6 advisers are not on the phone. So, taking this opportunity to reach out will cement in your clients' minds that you are there for them in the good times and the bad. What you want your clients to remember is that you were there when things were tough (and had them prepared in advance). “Life is not about waiting for the storm to pass, it is about learning to dance in the rain.” Every opportunity to grow comes from a place of adversity. Don't let the next possible big decline be wasted. Prepare now while the sun is out! Joe Duran is chief executive of United Capital Financial Advisers. Follow him @DuranMoney

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