More than money: How financial advisers help ease anxiety in uncertain times

Navigating change and uncertainty is when the value of advice can really shine.

When markets shake, trust matters even more - which begs the need to effectively position the value of advice in volatile times. 

Decoupling the real value of advice from economic market conditions has always been challenging for financial advisers. This may never have been so acutely felt during the last GFC, where forces completely out of their control left many clients questioning the value of their service.

The reality is that arguably the greatest value an adviser can bring is the ability to help clients adapt to change in their life circumstances. Whether navigating personal developments or providing more active management (and reassurance) during times of market volatility, this is when the value of advice can really shine.

Given recent global uncertainties, the need to demonstrate value adjacent to shorter term return performance becomes even more apparent. Ultimately our research suggests that most people are willing to pay for advice because of the trusted relationship it provides and how having a suitable financial plan makes them feel. 

Technological advancements and legislative reforms also see traditional business models challenged with many advisers feeling increasing pressure to base their value proposition on factors that go beyond administrative and portfolio balancing benefits.

We now seem to be living in a continuous ‘VUCA’ World where V = volatile, U = uncertain, C = complex and A = ambiguous. Driving forces include ongoing supply impacts from Covid, inflation, extreme climate events (causing massive insurance hikes), AI disruption, widening geopolitical tensions and now Trump’s disruptive tariffs.

All of these pressures and uncertainties are impacting retirement savings and prompting alarmed clients to reach out to their trusted advisers. So how can advisers manage these emerging needs both deftly and efficiently?

Some practical tips for handling alarmed and anxious clients

1.    Be proactive: - send out regular market downturn warnings and explanations to clients during periods of unusual turbulence.

2.    When anxious clients call, thank them for getting in touch and then actively listen to pick up and acknowledge their pressing issues and concerns. Ask questions like: “Tell me more about what’s particularly concerning you about the fluctuations you’re now seeing in your Super balance”?

3.    Before responding with any explanations or reassurance, try and summarise their concerns by asking for example - “What I’m picking up is that, as you are now nearing retirement, you are worried you may have to cash in at an inopportune time, just at the point when we had originally planned for you to finally pay off the last bit of your mortgage ? “Am I right”?

The important point here is that advisers are often primed to provide quick expert financial explanations and reassurance. However, when clients are confused, anxious and even angry, it’s vital to let them know we have fully heard and understood what is upsetting them, before offering explanations and reassurance. Summaries/paraphrases (in your own words) can relate to specific issues or impacts mentioned, or feelings such as insecurity, doubt, frustration, disappointment, and anger.

Genuinely listening to understand rather than listening just to reply, is a very powerful form of recognition and an essential skill in the journey to become a true trusted advisor. So often we know when someone has stopped listening and is loading up to fire back. Sometimes even a flicker of a smile can appear as they contemplate the impact of their reply!

Know anyone who does this?

Knowing you have understood their specific worries is a vital first step in helping clients move from being emotional and upset to being more rational and realistic. Also showing empathy by saying. “If I were in your situation and about to retire, I would also feel unsettled by what’s happening,” can help restore any lost ‘trust credits’ in a client’s ‘emotional bank account’ and act as a buffer against possible future financial losses.

That is, you’re on their side.

Of course, as with financial bank accounts, too many withdrawals (due to not being accessible, not actively listening or continually interrupting with explanations or solutions), can cause a client’s ‘emotional bank account’ to dip into ‘overdraft’. Clients who start looking at their watches or repeatedly challenging your solutions, may be signalling your relationship with them is becoming ‘overdrawn’.

A common perception is that active listening just takes too long and is an inefficient way to manage over-anxious clients. This is not necessarily the case as even with verbose clients it is quite legitimate to interrupt them by saying “Could we just pause for a moment”. What I’m detecting is that you have a real concern about ……………? Is this the case? If they say “Yes”, you then have their permission to offer a solution, which can greatly speed up a consultation. Of course, if they say, “No, not quite”, you can then ask them to briefly restate their key concerns, building both understanding and trust.

Generally, well framed ‘active listening’ is much faster and more effective than passive listening and is one of the foundations underpinning ongoing trusted advisor relationships, especially in times of market volatility.

In an ongoing series of blogs, we will further unpack practical ideas and tips to help Australians achieve a dignified retirement. This will include how to engage, motivate and empower individuals to act in their best financial (and life) interests and how to help them navigate retirement planning, intergenerational wealth transfer and aged care needs.

Authors

Humphrey Armstrong is a registered psychologist and consultant to MYMAVINS with decades of experience helping Australians navigate their transition to retirement and journey successfully through their third act.

Tai Rotem is a consulting partner at MYMAVINS with several decades experience in financial consumer, public health, social and behavioural change research.

Reach out to him at Tai@mymavins.com.au