Best Ways for FAs to Calm Client Fears amid Market Volatility

By Sam Del Rowe|

As stocks slide, advisors are reminding clients to stay focused on their long-term goals, using charts to highlight historical precedent and pointing to emerging opportunities.

A dramatic stock market selloff has advisors hitting the phones to calm client fears and fend off temptations to make rash decisions.

Stocks have been on a wild ride in recent days as concerns about tariffs and the broader U.S. economy sparked a volatile selloff, with the S&P 500 approaching correction territory off a mid-February peak.

When markets are turbulent, "the most important" action for an advisor to take with a concerned client is to "bring them back to their time horizon," said Chris Fasciano, chief market strategist at Commonwealth Financial Network. Advisors should remind clients of "their long-term goals and their investment process," he added.

Listening is also "the absolute key" for advisors, so that they can understand clients' concerns "and what's driving them," Fasciano said. Advisors can also use charts to demonstrate to clients that markets tend to have a pullback to some degree each year, while reminding them that downturns "tend to set up opportunities" in the future.

"The times it feels the worst, when volatility is making markets move quickly ... tend to present the best opportunities to make changes to portfolios to help achieve those long-term goals [for] your clients," Fasciano said.

"You have to take the emotion out of those decisions and come back to the tenet of what is your time horizon, what is your process and how do we achieve those goals," he added.

Jerry Sneed, Managing Partner at Third View Private Wealth, also recommends using charts to assuage client anxiety about volatility. Sneed uses "monthly and annual charts that show every drawdown and then where the indices have finished," he said.

Advisors should remind clients that volatility is to be expected and check in with them to ensure they have accurately gauged their risk tolerance.

"You always have to reconfirm with your clients to make sure they understand there's risk, that more can happen than will or does, but it's still out there," he said.

But the best-prepared advisors don't wait for markets to plunge to have these conversations with their clients. Advisors should also meet with their clients and plan for volatility when markets are up, according to Sneed.

"Particularly after a couple of strong years, people forget to do the work — a client's going to brush you off; they don't want to do the reviews. You have to force them to do it. That's your job as an advisor. And you can't get lazy as an advisor," he said.

"And if you haven't done it yet, this is the time to do it now. Do it right this second, and maybe you don't take advantage of this selloff, but you'll take advantage of the next one by staying disciplined," Sneed added.