6 Ways Financial Advisors Can Calm Clients During Market Volatility

Decades of research in human behavior and psychology show evidence that loss aversion is more powerful than desire for potential gains–nearly twice as powerful. Advisory firms see this tendency play out first-hand, with investors buying at the top of the market and selling at the bottom due to fear. With the recent fluctuations in the stock market and indications of a recession, it is easy to be fearful.

No one likes feeling scared, especially when it comes to money. Amidst today’s market volatility, investors are looking to their financial advisors for guidance. In this blog post, we will discuss six ways financial advisory firms can keep their clients calm and confident during these difficult times. Implementing these tips into your firm’s process will help your clients feel more secure about their financial future, build trust, and maintain a positive relationship!

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Build Client Trust in Economic Downturn with Riskalyze

Amidst unprecedented market volatility, financial advisors are under more pressure than ever to build client trust and maintain relationships. Not only do they need to be aware of the market conditions and how they will affect investments, but they also need to be able to understand client psychology to meet their clients’ needs.

At Riskalyze, we’re proud to offer a powerful tool to help advisors immediately understand how their clients feel, changing the game for thousands of advisors. This year, we decided to make Check-ins even more accessible and actionable for advisory firms entering an uphill battle to satisfy clients despite a market downturn and looming recession.


 

What is Riskalyze Check-ins?

 


Check-ins is a powerful tool that allows you to build a strong foundation to support your message between client reviews and give you an early warning signal when a client’s psychology might need a little care.

From the client overview page, it’s as simple as clicking “Send Check-in” and having that email land in your client’s inbox, allowing advisors to ask their clients two questions:

  1. How do you feel about the markets?
  2. And how are you feeling about your financial future?

Clients can quickly answer these questions from any device with just two taps. After that, they’ll see adaptive analytics explaining what’s ‘normal’ for their portfolio.

Consumer Research on Market Sentiment

Since the 2020 pandemic, there’s been a considerable spike in the number of advisors using Check-ins on a monthly or quarterly basis with their clients. It’s incredible how effective it is to sift out which clients need your attention and which ones are doing okay.


 

“I love these Check-ins. I sent them out and got over 50 responses! I heard back from clients that normally won’t respond to anything I send them.”
– Shawn, Advisor

 

Check-ins is like CLIENT RADAR. I would pay for Riskalyze just for this one feature!”
– Jimmy, Advisor in Texas

 


With Check-ins, Riskalyze has captured more than one million data points about how investors feel about the markets and their finances.

Pictured (below) is a combined view of all the investors tapping on these Check-in questions in 2020. Market sentiment is in purple, and plan confidence is in green. Orange shows what the S&P 500 was doing over the same period. The stock’s performance is tightly correlated with aggregated market sentiment.

Note that before the pandemic, it was normal for plan confidence to be lower than market sentiment. When markets are up, there will always be investors wondering, ‘Why is the market beating my portfolio?’ in the good times. That gap briefly inverted during the pandemic and, by the end of the year, had flipped back to its normal state.

However, the pandemic created a shift in investor psychology and increased anxiety. When you look at 2021 and 2022 (pictured below), market sentiment plateaus even as SPY continues to rise.

In 2022, market sentiment dips below the low point of the 2020 pandemic crash. To investors, sustained inflation seems to be worse than the pandemic crash.

Plan confidence has stayed well above market sentiment for clients who know their risk number.

Making Check-ins More Actionable

Because advisors love using Check-ins, we’ve rebuilt the experience to make Check-ins more accessible and actionable whether advisors are Check-ins experts, or using the tool for the first time. This powerful, new update will help you immediately comprehend how your clients are feeling (both individually and collectively) and see which clients you may want to follow up with based on their responses. We are also implementing a Search and Sorting functionality of the clients list so you can search for your clients and sort by their responses easily.

Client Categorization – Our product team has been hard at work building four new client labels that are going to make it even easier for you to take action when a client checks in — Fearful, Anxious, Confident, and Happy.

Fearful clients responded negatively to both questions. Not only are these clients worried about the market, but they also aren’t feeling confident in their financial plan. And most of the time, it’s these exact clients that have a Risk Number that is out of alignment with their current portfolio! It’s no wonder they are worried about market volatility and calling or emailing you every week asking, “Are we okay?”

Anxious clients might not be worried about the market, but they are feeling a little nervous when it comes to their financial future. Oftentimes, we notice these are the clients who have a Risk Number slightly above or below their current investments. This is usually an indicator that a slight tweak or update to their portfolio might bode well for this client relationship.

Regardless of how the markets are doing, Confident clients feel confident in their financial future. And this is because you’ve taught them to understand their Risk Number and 95% Historical Range. It’s these clients who understand the value you bring.

Lastly, Happy clients are feeling positive about the market and about their financial future. These are clients who believe in your advice and the power of the Risk Number, and understand that you’ve set them up for long-term success.

New Table View – From the new table view, you can select any client and see all of their Check-in history. This empowers you as their advisor to see how they’ve been feeling about the markets and their financial future over time.

Check-ins is a powerful way to check on the pulse of every single client within your firm and know when a client’s psychology might need a little care. These powerful features are going to revolutionize the way that your firm engages with clients and ensures that clients feel confident in their financial plan.

These new features are available TODAY for all Riskalyze users on every plan. Don’t hesitate to reach out to our team at if you have any questions or feedback.

Watch Riskalyze CEO, Aaron Klein, walk through the new Check-ins updates from the 2022 Fearless Investing Summit Stage below.

 

Haven’t got Riskalyze? Book a Demo today to see how Check-ins can transform your business by helping you grow client relationships in any market conditions.

CEO Aaron Klein’s Product Keynote from the 2022 Fearless Investing Summit

New Product Announcements from Summit 2022

Last week at the Fearless Investing Summit stage in Salt Lake City, we were thrilled to announce a brand-new suite of features and tools to the Riskalyze Platform that we know you’re going to love. Read on to learn more about all the exciting, new resources now at your fingertips!

Watch the Annual Keynote Address from CEO Aaron Klein

Unable to join us live in Salt Lake City or virtually? We’ve got you covered! Catch up on all the action from this year’s highly anticipated keynote address by Aaron Klein and watch it in its entirety for free below.

You’ll learn what’s new and what’s next for the Fearless Investing Movement, hear our exciting partnership news, and see all of our new product features and enhancements in action!

Watch the Keynote

Check Out What’s New
With Check-ins

Your favorite feature has gotten an upgrade! We’ve completely rebuilt how you engage with Check-ins, so you can see responses across your entire client base and sort them by status so you can see which clients might need your attention first. Check-ins are the most powerful way to keep your finger on the pulsebeat of client psychology, and now, they’re more accessible and actionable than ever before.

See what's New

Welcome Tax Drag!

Tax Drag is defined as the reduction of a portfolio’s annualized return due to taxes. Very simply, it’s the tax liability incurred due to distributions and capital gains in a non-qualified account.

Pretty much every investment manager talks about running a tax-efficient strategy, but very few provide metrics that are easily understood and can demonstrate the tax savings to clients. With Tax Drag, we’re measuring the tax efficiency of how securities in your portfolio are managed by the investment manager.

Introducing Account Groups

The All-New Portfolios Experience now has Account Groups which helps financial advisors easily categorize all their accounts. This new feature will help you increase efficiency when working with complex portfolios and will make it even easier to find the information you need.

We’re confident that Account Groups will optimize your workflow so that you have more time to spend where it matters most — with your clients.

Learn More about account groups

Meet Riskalyze Ultimate

We’re thrilled to introduce Riskalyze Ultimate — the firmwide growth platform to drive a consistent client experience across your advisors and alignment with compliance for every account.

Ultimate integrates into your CRM, asset platform, and financial planning workflows to get the growth flywheel spinning, drive a consistent client experience, deliver the insights to accelerate your progress, and protect your business value.

Experience Ultimate

The Power of Numbers: How Data Can Improve Your Client Relationships

Data is everywhere. It influences the ads we see, the shows we binge watch (hello, Yellowstone), the people we interact with on social media and even how we’re treated by medical professionals. The right data can be massively influential in how we experience and receive information.

In fact, 2.5 quintillion bytes of data are created each day. When we organize groups of that information into usable and insightful pieces, we’re given “big data” – which can unveil trends and patterns that aren’t obvious on the surface.

Big data changes our lives in both big and small ways. For advisory firms, big data is essential to not only knowing your clients, but interacting with them in a positive and fruitful capacity.

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The Difference Between the Buyers and Users of Your Tech—and Why It Matters

When you’re a one-person RIA, it’s easy to understand why you’ve bought your tech and how you intend to use it. After all, the same person is making both of those decisions: you.

If you’re in charge of an enterprise firm, though, deciding on the right pieces for your tech stack becomes exponentially more difficult. As a large financial institution, you have separate departments, often with layers of approvals and owners—and they can both have very different ideas about what “good tech” is all about. And while your technology team is making decisions on what applications to employ, your advisors are the ones actually using the software.

The buyers and users of tech are often in totally different arenas within your firm, so how do you get them on the same page? It starts with identifying the needs and wants of both groups to find common ground and grow connections.

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How to Capture the Next Generation of Investors

Look around at your firm’s clientele. What do they look like?

For most advisory firms specializing in retirement planning, the demographic is typically older, wealthier Americans either already enjoying or quickly approaching retirement. It’s a good setup – but it isn’t necessarily sustainable.

In the next few decades, experts expect to see a large transfer of wealth from baby boomers to younger generations. But with big cultural differences between these groups, will your firm be able to keep that wealth in-house?

Let’s explore who these next generations are, what they expect from an advisory experience, and the top three ways you can capture their interest (and business).

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How Hyper-Personalization Has Changed Client Expectations

When you last logged into Netflix, how did you decide which movie to watch?

Did you have to scroll through Netflix’s hundreds of menus for an hour before you found something you wanted to watch? Or, more likely, did you flip through the “Recommended for You” section and find something that looked similar to your other interests, and then let the auto-play feature do the rest for you?

Media companies like Netflix have pioneered the use of hyper-personalization to cater directly to the individual interests of each of their customers.

Through the use of data collection, they know what you like to watch, how long you watch it for, and what else might keep you hooked long enough to keep paying $14 a month as you wait for the next season of Stranger Things to arrive in two years.

Financial advisors have long held the belief that personalized customer service is critical to building a successful advisory firm, and that’s still true today. But in a world of hyper-personalization, client expectations are radically different from what previous generations have considered “personal.”

In this blog, we’ll show you how to keep your firm at the forefront of creating an amazing client experience with hyper-personalization leading the way.

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Learn How Advisors Use Riskalyze to Grow Their Business Without Sacrificing Client Service

As a mid-career advisor, you’ve put in the hard work to build a good-sized book of business – but that doesn’t mean you’ve left that growth mindset behind. Likely, your focus right now is on growing your business further and creating the best experience possible for your current clients.

Continue reading “Learn How Advisors Use Riskalyze to Grow Their Business Without Sacrificing Client Service”