By Jay Ledesma

Keep clients from pushing the panic button 

PANDEMIC hits the market anew. Soon after the government announced that the National Capital Region plus some nearby provinces will be placed under ECQ for at least two weeks, the market plunged back to the 6,400 level and heavy foreign selling was observed. The Philippine stock market ushered 2021 already at around 7,200 level.

As may be expected, these movements brought again some jitters to our investors. Life insurance clients who own investment products (variable unit link) are probably feeling restless and anxious right now. And they're not alone. 

The majority of Filipinos are nervous that their personal financial standing will be impacted by the prolonged stricter quarantine restrictions.

As the general sentiment remains cautious amid the uncertainty on the extension of the “NCR plus bubble” and with the market behaving with little predictability, it is imperative that we help our clients stay calm and make informed decisions.

How do we then keep our clients from pushing the panic button and ensure their financial goals are on track? 

Remind them of their investment goals. When people get anxious and emotional about their investments, they often lose sight of the reasons why they invested in the first place. This often leads to some irrational decisions being made.  We usually invest to meet our medium to long-term goals... goals that will require at least 3-5 years time horizon. It’s usually for our child’s college education, or for major purchases, or for our own retirement. And historically, following a significant dip, the market recovers after a year or two. 

As the money invested is for a long-term purpose and is not needed now, our clients should be reminded of this fact thus avoiding cause to panic. 

That’s why honest-to-goodness financial planning should be done with our clients. I know some friends who have asked the help of their financial advisors to navigate and cushion the impact of the pandemic by discussing and adjusting their short- and long-term financial goals. Identifying our short and long-term money goals is a critical step. Money for short-term and emergency needs should be kept on savings instruments. It should not be invested for a potential upside. Doing this is very risky and is a sure cause of panic attacks. 

Help them create the right attitude and mindset. One of the best ways we can help our clients, either in good times and bad, is to help them create the right attitude and perspective. When the market is up, we need to remind them not to get too excited, as most would have the tendency to cash in already their gains. On the other hand, when the market is down, just like now, we need to help them stay calm and stick to their financial goals.

When you receive a panic call from a client because the market has dropped (which you must have received a number by now), help them take a step back and share what it means in terms of their personal investment reality. 

I have a very close friend who was at the verge of hitting the panic button because the market has dropped more than 20%. But since his investment portfolio is diverse enough, he only experienced an actual drop of less than 10%. This was more than enough to calm him down and appreciate the wisdom behind the saying “never put your eggs in one basket”.

And always help them remember that the markets being “down" is not always a bad case. It’s during this “downtime”, when prices are on a bargain or discount when markets go “on-sale”. For those who have been investing and have experienced the full cycle, this is an excellent time for them to get in so when prices start getting up they’re already on the ride.

They say that this “discount/sale period” is the window of opportunity when the rich become even richer.

Be available for them. These days, many of your clients are confused, scared, and frustrated. Especially when they see their investments going down. The worst thing you can do during this time is not to reach out and make yourself scarce for your clients. Be proactive. Don’t wait for your clients to call you, call them. 

Call them regularly to ask how they are and what they're worried about. 

There’s a lot of fake news out there. If no one is advising or telling your clients the real score, those fake news become their reality. A trigger to hit the panic button. It's your job to help them address it. If the news is not true, set the record straight. If it's true, explain how it affects your client.

Don’t be afraid to be the bearer of even the worst news about their investments. They will not be happy for sure but many clients just need to be heard and explained what’s happening on their investments. 

The comings months ahead will still be challenging and uncertain. But one thing I am certain of -- your clients need you now!

Be mindful that it is your job to make yourself accessible and available for your clients, help them stay focused on their money goals, create with them the proper perspective and keep them from pushing the panic button. That’s what true client servicing is all about! 


About the Columnist

Image of Jay Ledesma

Ms. Jay Ledesma writes about local tourism and business bits that delve on investments and insurance.