In normal times, advisors field lots of tough money questions from clients. Those inquiries are often freighted with anxiety now.
XResponding forthrightly to tough questions requires delicacy. When you level with worried investors, you risk telling them what they don't want to hear.
Amid a pandemic, clients are raising concerns that do not lend themselves to easy answers. But that doesn't stop advisors from tackling the thorniest questions.
Delivering bad news makes matters worse. Anticipating that the client will flinch or get upset when hearing your response creates a tension all its own.
For Andrew Schwartz, an advisor in White Plains, N.Y., a dreaded question he's getting lately involves retirement planning. Clients ask, "Am I still on track to retire?"
"It's dreaded because what if, in these Covid times, a significant other passes away or their income stream changes for the worst," Schwartz said. "We've had a couple of these hard-to-have conversations where I say, 'We think you may need to consider working for another two years.' "
As fatalities soared in New York, Schwartz sought to address feelings of hopelessness among clients. A few asked, "What if I get Covid-19 and die?"
Shifting their focus to a positive long-term scenario, he reassured them that the situation would ultimately improve. But once they were comforted by his comments about surviving the coronavirus, some clients fretted about more mundane issues.
"I was asked, 'Why am I paying all this premium for a long-term-care insurance policy?' " Schwartz said. "I reminded them that we set up this policy to protect their family and not have their daughter have to move to be near them" to provide caregiving.
Focus On The Right Answer
As much as advisors try to address client anxieties head-on, there are instances when an indirect answer works best. What might initially seem like evasion can prove a more convincing, satisfying response.
Consider the always-popular question about market timing. Volatile swings often spur investors to ponder whether they should rethink their conservative approach.
"Several clients have recently asked me if this is a good time to get in the market or get out of the market," said Crystal Wipperfurth, a certified financial planner in Madison, Wis. "There's a fine line between greed and fear."
She dreads this question in part because clients' emotions tend to flare. The desire to stay one step ahead of a fast-moving crisis — and pounce on what some perceive as fleeting opportunities — can prove hard to resist.
"Some clients want me to say that now is a good time or a bad time to get in the market," Wipperfurth said. "When I don't say either, they can feel powerless."
She prefers to reply, "It's the wrong thing to focus on. I don't want to make a bet one way or another. The truth is we don't know in the short term what'll happen to the market."
From there, she redirects their attention to their long-term financial plan so that they make smart moves based on what's within their control.
Steer Clear Of Politics
In some cases, clients pose vexing questions that lead to dreary discussions of unglamorous but vital topics. That's when advisors demonstrate their value as educators.
For Bryan Bibbo, an advisor in Avon, Ohio, a frequent question revolves around the potential for even higher medical bills . His clients have asked, "What will Covid-19's impact be on my future health care costs?"
"I dread that question because health care costs do go up year by year with age," Bibbo said. "I explain that the states have to approve rate increases (requested by health insurers). But if you're in the 60-65 age range, then health care costs will be pretty expensive. After (you qualify for) Medicare, costs will go down a bit but dental and vision will still cost a lot."
Another reason he doesn't look forward to this question is it sometimes causes clients to share their political views. And like many advisors, Bibbo prefers to avoid talking politics with clients.
"Rather than get into the politics of health care, I'll say, 'I'm neutral in this. I support America and I want what's best for this country,' " he said.
As the market plummeted in mid-March, some clients asked Bibbo, "Why don't we go 100% in cash?" While he understands the impulse to sell everything when each day produces mounting losses, he answered with another question: When do you want to get back into the market?
"No one knows the answer," he said. "You're trying to time the market, and that won't work" most of the time.
YOU MAY ALSO LIKE:
14 Stocks Drove A Third Of The $7 Trillion Coronavirus Rally
Join IBD Live For Top Chart-Reading And Trading Techniques
Stay Up On Investing Trends With IBD's 'Financial Advisor Update'
