Investing in the Emotional Bank Account: How Financial Advisors and Leaders Can Communicate Effectively as We Enter a Bear Market
The news is just relentless lately?
On the one hand, we’ve got deadly mass shooting after deadly mass shooting. On the other, we’ve got the January 6 hearings dropping revelation after revelation about what happened that fateful day. And on the other other hand, we have record-breaking heatwaves and unprecedented flooding at Yellowstone national park — yet another reminder of the consequences of climate change. On the other other other hand, reproductive rights are in jeopardy with Roe v. Wade on the precipice or being overturned and anti-LGBTQ and specifically anti-trans legislation and regulations continue to spread across vast swathes of the United States — all while we’re over two years into living with a deadly pandemic that’s claimed more than 6 million lives worldwide. And on the other other other other hand, Wall Street has officially slipped into a bear market and a recession may be around the corner.
It’s a lot to manage! Right now, everyone is understandably incredibly shaken, and whether you’re leading a company or working directly with investors (or an investor yourself), you’re probably dealing with folks in a panic, shouting, “Sell!” in a crowded theater. They’re worried — rationally, sensibly worried — that their investments are going to go down the tubes, especially with major tentpole stocks like Amazon crashing. What communication strategies do you use to steady the ship and prevent rash, fear-motivated decision making?
Reach out first.
Investors and clients want to know you’re looking out for them, especially if you’re about to tell them something they don’t necessarily want to hear. Fear is a powerful motivator, but so is a phone call or an email; it shows that you know the situation and you’ve got it under control. It also reminds them that they’re in good, vigilant hands, someone with eyes and ears on the market and their interests at heart. Putting together a message that addresses their worries before they’ve even thought of them helps prevent panic selling, which also helps to keep their investment secure.
More than anything, it demonstrates initiative, that you are not simply responding to events but making active decisions for the longevity of their investment.
Be calm and informative.
Next is inspiring calm by staying calm. Focusing on clear, direct, and contingent language: that the bear market is a situation but is not forever, and that individual market fluctuations only rarely presage genuine market corrections. Connect the dots with long-term trends and other market disruptions to demonstrate that this likely isn’t going to erase their wealth overnight, and that selling now would obliterate the financial goals they themselves have set; selling now would almost certainly constitute accepting a loss in an attempt to stanch the bleeding when it’s not necessary to do that because, for example, Amazon hasn’t become less central to the global economy, and while inflation is certainly a concern, this panic isn’t going to become a market collapse.
Listen and communicate with empathy.
As much as is possible, really listen, empathize, and mirror your clients’ language. Mirroring helps establish that they have been heard and correctly understood; it shows respect for their point of view, which is critical when clients are afraid, angry, or upset, as they would be in the midst of an entirely justifiable froth over the market drop. Emotions are running high, which means people need to feel heard. This can also be a great tool for avoiding miscommunications and making sure you and investors are on the same page. Critically, listening, communicating with empathy, and mirroring their language also makes sure to keep the connections between what they are afraid of and what you are saying strong; the brain is built on semantic associations like that.
Showing competence, initiative, and attentiveness can help you protect your clients investments and strengthen their confidence in you as an advisor. Communication, after all, is all about connecting. It’s your strongest tool for building lasting relationships. You might even think of it like putting long-term investments in an emotional bank account, so to speak. With calm leadership and effective communication, times of crisis can actually be useful opportunities to fortify professional bonds. You just have to rise to the occasion.