Election season is here. For the next few months, every TV screen, website, and news headline will be filled with political headlines, rumors, speculation, and discourse. Speculation constantly reminds the brain that the future is uncertain. Uncertainty causes stress, anxiety, and fear.
As a Financial Advisor, understanding those feelings is paramount in client conversations. In times of uncertainty and change, your role becomes even more critical. Clients are not just concerned about the numbers on their statements but about the impact of those numbers on their hopes, goals, and dreams. Naturally, this fear will lead to questions and conversations fueled by heightened emotions.
Since both politics and uncertainty tend to generate intense feelings, the best way to approach these conversations is to prepare how you will handle them when they arise. Remember, as discussed in the previous article, engaging in political conversations can be valuable and beneficial in your client relationships.
Here’s a framework to guide conversations during this upcoming election season to enhance your relationships with clients and reassure them that they’re going to be okay:
1. Stay Informed & Unbiased
You want to stay informed because helping analyze what legislative changes mean for your client’s finances is valuable. Focus less on the policy and more on the implications. Stay informed about the various policies candidates propose, considering if these policies can affect your clients’ financial future. By keeping a close eye on policy discussions and understanding how potential changes could impact tax laws, retirement plans, investments, and more, you can better educate clients on what to expect. However, it’s equally important to clarify when certain policies might have minimal or no direct impact on financial plans, helping to alleviate unnecessary concerns. This balanced approach helps you coach your clients to be well-prepared and confident, regardless of the election’s outcome.
2. Acknowledge The Feelings
In his book “How Minds Change,” David McRaney says, “The idea is to move forward, make the person feel heard and respected, avoid arguing over a person’s conclusions, and instead work to discover the motivations behind them.”
Making them feel heard and respected while discovering their motivations requires much more listening than talking. It requires approaching the conversation with a genuine sense of empathy and curiosity.
For example, start by acknowledging and normalizing the feeling: “I hear what you’re saying and agree there’s a lot of unknowns right now.” Then, seek to understand better where they’re coming from: “I’m curious if you think the election outcome will impact your plan we’ve built?”
Often, you are the clients’ only emotional release valve, and just simply giving them the space to talk it out will begin to calm anxieties on its own.
3. Confirm the “WHY”
In times of heightened emotion, it’s normal to zoom in and focus solely on what’s top-of-mind. We dial in on the short-term and tend to lose perspective of the long-term. One of the most effective ways to help your clients zoom out and ground themselves is to remind them of their “why” or the goal of their investments.
Refer to your notes and previous conversations on WHY the client was investing in the first place. For example: “When I look at your plan, your goal was to be work-optional as soon as possible and create memories and experiences with your family. Is that still the case?”
Confirm their “why” and the purpose of the money to help them relieve stress around uncertainty.
4. Use History to Your Advantage
Use your favorite charts, graphs, and logical reasoning to get through the election season. Because in uncertain times, there can still be comfort in knowing and seeing that we’ve been through this before. Remind them that the market is apolitical with a chart like this one from Dimensional.
Staying invested throughout an election season can potentially increase your chances of success. Here’s a great example from Capital Group.
And, lastly, if they’ve been your client for more than four years, remind them that you’ve been through election cycles before and come out the other side.
5. Point Out the Pain
Suppose you’re at the point in the conversation where the client is still worried about the election’s impact on their portfolio and is considering selling. In that case, it’s time to add some friction to the decision-making process. Here are ways to do that:
Walk them through how a decision to sell their investments would impact their “why.”: For example, “We built this portfolio based on your desire to be work-optional and create memories for your kids. And we built it to increase the likelihood of making that happen. We even accounted for volatility like this. If you were to sell out, it would likely mean waiting longer to become work optional.”
Remind Them of the Tax Implications: If a non-qualified account has been invested for an extended period, gains may have accumulated. Selling would trigger taxes. Let the client know how much tax they’d be paying for the decision to sell.
6. Focus on Opportunity
The ideal path forward during times of uncertainty requires patience—doing nothing is often the hardest thing to do when you’re anxious about the future.
So, if action can help ease anxiety, then help the client focus on actions that are within their control. Things they can do that will help them take helpful action regardless of the outcome of the election:
-Evaluate the savings rate
-Evaluate spending and cash flow
-Evaluate estate plan and insurance
-Discuss potential tax planning opportunities
-Evaluate asset allocation and rebalancing opportunities
By approaching election season with empathy, active listening, and focusing on long-term goals, you can help guide your clients through uncertainty and keep their confidence in the financial plan you’ve built together.
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