Many brokers and advisors who entered the industry after the 2008 financial crisis are now staring at their first-ever bear market. But there’s no scarcity of advice on how these brokers and advisors — who have been accustomed to the 11-year bull run — can help their clients navigate treacherous market conditions. There’s a lot of advice for their firms, too.
What advisors can do:
1. Leverage the experience of the FA community
Speaking with other advisors is “invaluable” in periods of excessive market volatility because it helps give advisors perspective and eases frustrations, says Justin Castelli, founder of Fishers, Ind.-based RIA RLS Wealth Partners, which had $35 million in client assets as of last year.
Sharing experiences could be more effective in refocusing advisors than reading commentaries or analyzing market movements from prior years, he says.
“We absorb the fear, the stress of our client,” he says. “And if you keep on absorbing that yourself and don’t have an outlet, that’s not good for you.”
Castelli is also the co-founder of Advisor Growth Community, a private online group of nearly 100 FAs. The group acts as an industry resource through webinars and guest lectures, which would be particularly useful for FAs at a time like this when relevant conferences have been canceled or postponed due to the coronavirus pandemic.
“Put our egos aside and leverage the people in this business,” says Penny Phillips, founder of New York-based consultancy Thrivos Consulting. She says her message to Generation-Z advisors at broker-dealer firms is to partner with more experienced advisors.
“Clients will appreciate the fact that in really difficult times, you have a team of people who you can lean on to help you,” she says.
Part of Thrivos’ mission is to “support advisory firms and professionals as they embrace industry change” and help clients assess if they’ve built “a business strong enough to be indestructible.”
2. Polish skills and learn new tools
Mike Turvey, senior strategist of trading education at TD Ameritrade Institutional, says bear markets are an opportunity for advisors to learn “to be comfortable with all different market conditions.”
Turvey teaches advisors technical market analysis and how to use the tools to help them analyze markets. For novices to bear markets, understanding volatility and options strategies is a must, he says.
Marina Shtyrkov, a senior analyst at Boston-based research firm Cerulli Associates, suggests doubling down on training, especially on financial planning tools and software.
3. Put yourself out there
Advisors with little or no experience in bear markets should leverage their own expertise, says Thrivos’ Phillips.
“I would actually use this as a time to say, ‘Look, I may be 32 years old, but I’m in this business and I am a person who can help and provide advice and guidance,'” she says.
Phillips says social media would be an ideal avenue for these advisors to expand their reach.
“Young advisors should be on social media right now offering advice and guidance to anyone in their network, even if it’s just a second opinion on their plan,” she says.
What firms can do:
1. Customized messaging
Thrivos’ Phillips says firms should have a client communications messaging strategy for advisors that corresponds with their experience levels.
“Firms should 100% be isolating communication to different tiers of advisors,” she says.
Cerulli’s Shtyrkov agrees. Firms need to address the behavioral aspect of the client’s response to market volatility and perhaps offer pre-packaged communication to advisors that could include “psychological strategies on dealing with emotional reactions to market volatility.”
2. Leveraging internal mentorship groups
Most large firms also have mentorship programs they can access to benefit advisors with limited bear market experience.
Raymond James, for example, is using its Advisor Mastery Program to connect trainee advisors with mentors and internal consultants. The program is also providing advisors with information and best practices.
“In order to survive and thrive, you must move beyond a reactive mindset and develop a game plan for reaching out to clients,” Matt Ransom, vice president of new advisor development at Raymond James, tells the firm’s advisors.
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