Yesterday millions of American investors panicked.  Unfortunately, so did many of their advisors.

Whenever the financial markets become volatile, investors have mood swings that exceed the magnitude of the movement in the market. (This goes for upward as well downward volatility.) Most of our clients grew up with depression-era parents.  These people grew up hearing things like “turn out the lights; don’t waste electricity,” and “money doesn’t grow on trees.”  They heard stories about people who “lost everything” although those people really didn’t have much to lose and what they lost was not lost in the market.

In addition, our clients watch the evening news and read the morning paper, and bad news sells.  Headlines included “Depressionary Tales”, “A Year of Losses” and “Stock Market Plunges.”  While it would be ostrich-like to ignore the current market environment, getting caught up in the hysteria of traders is never the right perspective for the astute financial advisor. The question becomes “Where should we direct our focus?”

When advisors conduct client reviews the vast majority of the time spent in the interview is focused on the investments and other financial products. Unfortunately, advisors dedicate very little time to review and adjustment of the client’s goals.  If the strategies utilized fit the client’s goals in the recent past, then what has really changed?  Instead of maintaining focus on the client’s goals, we allow the conversation to focus on prices that are set by traders!  If the client’s goals haven’t changed, then the strategies should not change either.  For example, if a client’s goal is income at a certain point in the future, and you have a solid asset allocation with good money managers, and you employ risk reduction strategies, the short term gyrations in financial markets exacerbated by junior reporters generating unrealistic scare headlines have no bearing on long term outcomes.

I recommend that the first third of a formal client review be dedicated to review of the client’s goals.  Don’t just talk about the numbers; paint the mental picture of what the long term outcome will look like to your client.  Keep them focused on what is really important to them about money, and then discuss the strategies you feel will get them there and why.  Be passionate, and do everything in your power to keep the client from buying high and selling low.  And ask for referrals, even in the face of a bull market.  Your clients know a lot of people just like themselves that want a financial advisor just like you who stays focused on client goals.

Good selling!

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Business strategist and professional speaker Michael Roby addressed a group of hospitality professionals at the Minneapolis Airport Hilton Conference Center in Bloomington, Minnesota on September 9, 2008. The Hospitality Business Breakfast, hosted by noted hospitality expert and speaker Stuart Gray offers industry professionals an opportunity to hear presentations from leading sales and marketing experts.

Michael Roby is a nationally known author, business strategist, and speaker that helps his audiences get RESULTS that are quantifiable and lasting. In over thirty years in the financial services industry, he has acquired tremendous results-getting experience that he can eloquently transfer to others. While corporations and audiences know Michael as an authority on sales, marketing, and the distribution of financial services, he is known as one of America’s best motivational speakers. Roby delivers thought-provoking keynotes that leave a lasting, positive impression on his audience. His website, www.michaelroby.com is also home to a leading sales and marketing blog.