It May be Different this Time
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
I am weary of this famous quote from Sir John Templeton: “The four most dangerous words in investing are, ‘This time it’s different.’”
It certainly feels different this time. Acknowledging that difference will enhance relationships with your clients.
Over one million Americans are filing for unemployment benefits every week. Over 28 million people claimed benefits from all programs for the week ending August 1, 2020.
Major cities are seeing a huge outflow of residents. Residential apartments are at all-time high vacancy rates. Almost 55% of businesses closed on Yelp have shut for good. The U.S. is bracing for an “avalanche” of evictions.
A key coronavirus model is predicting nearly 300,000 deaths in the U.S. from COVID-19 by early December 2020.
Racial tension and violent protests continue to plague some major cities.
The upcoming election has polarized Americans in a way few have experienced.
Oh, and an asteroid is zooming in our direction.
Naturally your clients are concerned. There’s stunning evidence that a third of Americans now show signs of clinical anxiety or depression.
Telling them it’s no different this time will not be comforting.
By blindly espousing the “it’s not different this time” mantra, you may be creating more stress, which is the opposite of what you intend. According to experts, too much “forced positivity” can be toxic.
Of course, we want to believe everything will turn out alright. Perhaps an effective treatment or a vaccine will be found and life will return to normal.
But putting a positive spin on what’s obviously a dire situation trivializes legitimate concerns and can be counter-productive. As one expert correctly noted: “…promulgating messages of positivity denies a very real sense of despair and hopelessness, and they only serve to alienate and isolate those who are already struggling.”
A better approach
Instead of offering positive platitudes, a better approach is to acknowledge negative thoughts and emotions without judging them. According to one study, those who accepted their mental thoughts attained better psychological health, “in part because acceptance helps them experience less negative emotion in response to stressors.”
How does this impact the way you deal with anxious clients?
Marketing Services For Evidence-Based Advisors...and a New Book!
We offer consulting services on how to convert more prospects into clients through Solin Consulting, a division of Solin Strategic, LLC.
I'm working on a new self-help book for the general public. It's called:
How to Relate to Anyone
Ask will be published in mid-2020. For more information, click here.
Instead of assuring them, “It’s not different this time,” ask them to elaborate on their feelings and emotions, by asking something like, “Can you tell me more about your concerns?” Then ask appropriate follow-up questions.
After you have given your client a full opportunity to discuss all concerns, ask this question: “What can I tell you that would be helpful”?
This approach has many benefits. It reflects a genuine concern for the feelings of your client. It makes you far more relatable than the smug (or even arrogant) advisor who, “has all the answers.”
The most significant benefit is that it’s honest. You don’t know whether or not it’s different this time. You can’t predict the direction of the market. All you can do is ensure your client isn’t taking too much risk and that the investment plan you’ve agreed upon is as sound as you can make it.
Admitting your limitations will enhance your relationships.