5 Steps for Getting Ahead of the Next Recession
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5 Steps for Getting Ahead of the Next Recession

By Matt Oechsli | @mattoechsli

Benjamin Franklin’s quip “An ounce of prevention is worth a pound of cure” should be the mantra for financial advisors, especially in today’s world.

As you’re well aware, our historic economic expansion is poised for a correction, therefore in the spirit of Sir Franklin, the following 5 Steps will help you get ahead of the next recession.

Step 1:  Create Your Narrative

Channel Warren Buffet and develop your “next recession” talking points. This doesn’t mean you’re becoming Chicken Little screaming “The sky is falling” – hardly – it means you’re proactive, studying 2001’s recession and the 9% S & P decline and the 7% S & P decline in the recession of 2008.  In effect, you’re creating succinct talking points based on historical data.

Step 2:  Equip the Entire Team

You’ve probably had some of your affluent clients asking you about the market correcting, the next recession, taking profits, etc. You want every member of your team conversant in the talking points you’ve established in the first step. It’s important that everyone is viewed as a knowledgeable worker capable of answering questions and addressing concerns. In other words, whoever happens to be communicating with a client at any given time is on message and capable of instilling an air of professional confidence.

Step 3:  Schedule “Getting Ahead of the Next Recession” Reviews

There’s a tendency for some financial advisors to let “sleeping dogs lie” – avoid what they perceive to be an unpleasant conversation with clients because they don’t want to stir things up. This is a classic mistake! These financial advisors finds themselves in a reactive mode, playing defense, when the proverbial “s___t “ hits the fan.

As much as serious market fluctuations make news and can create client angst, our research is quite clear on what today’s affluent consider of primary importance:

  • Investments meeting their expectations
  • Protection from downside risk

All of this translates into their primary concern – their ability to maintain their current lifestyle throughout their retirement years. Period!

This is why the Getting Ahead of the Next Recession review theme should involve a thorough review of their financial plan, making certain they’re on track with the goals that have been established, adjustments (if any) that might be necessary, and explaining what to expect during and post the next recession. Essentially, here is where you’re managing expectations and demonstrating leadership.

Step 4:  Take Systematic Action

Starting with your top 25 clients, this themed review should be executed with systematic precision. You might want to think of this as a fire drill where everyone must participate – and that means both spouses. Your top client interactions should be handled face-to-face whenever possible. If they’re snowbirds, schedule your review as a conference call – video format if you have the capabilities.

Remember, you are the expert, that confident “client-centric” knowledge worker. Not only will this proactive approach provide your clients with more peace of mind, it’s likely to stimulate word-of-mouth-influence – especially — if you, dumb like a fox, suggest that if they ever hear of a family member, friend, or colleague expressing concern over the market, simply ask “Has your financial advisor reviewed your financial plan recently?”

Step 5:  Get Social 

The aforementioned steps have the most positive impact for financial advisors who have established an emotional connection with their affluent clients. Yes, you’re an extremely professional financial advisor – but – when you’ve taken the time to develop a personal relationship with your affluent clients they…

  • Pay more attention to your communication
  • Follow your advice
  • Are 6xs more likely to consolidate assets
  • Recommend you more

Please don’t wing these steps. Think of it as a drill, your version of a fire drill, that will provide peace of mind and very possibly generate the type of word-of-mouth influence that stimulates those unsolicited referrals.

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