 |
How to Discuss the War with Iraq with Your Clients
How to Discuss the War With Your Clients
By Nicole O. Coulter
Horsesmouth Senior Editor
March 20, 2003
Now that the war is under way, how do you plan to show clients that you're looking out for their best interests?
But with U.S. troops marching toward Baghdad, clients still need to know you care. Whatever your feelings on the war, now is a great time to show them you're looking out for their best interest.
What can you do in addition to another handholding letter? Consider the following tips:
Assemble motivational materials. Compile a custom collection of your favorite quotes and market data—material that truly inspires you and reflects your outlook on the current situation. San Diego–based credit union advisor Kron Littleton marches into client meetings with a binder he calls his "war book." Containing historical performance charts, graphs, and other commentary, the personalized tome also features a particularly bullish quote from Warren Buffett: "We will continue to ignore political and economic forecasts … If we can identify businesses similar to those we have purchased in the past, external surprises will have little effect on our long-term result."
Provide perspective. Littleton shows curious clients an album of photographs he snapped as a naval officer in the first Gulf War. Taken from his perch aboard a carrier in the Persian Gulf, the pictures of smoldering Kuwaiti oil fields are a vivid display of Iraqi sabotage. Littleton survived an Iraqi mine explosion that damaged his ship. Once the smoke cleared, of course, victory in the first Gulf War ushered in a decade of economic expansion and a nine-year bull market. Not a war vet? Inspire clients with your own tales of overcoming trying situations as you encourage them to take a long-term approach.
Host a town hall meeting. Move over, Oprah. Several advisors are assembling groups of clients to address war concerns in an open-air format. Veteran advisor Deena Katz, in Coral Gables, Fla., hosted such an event this week at a local hotel ballroom with more than 50 clients in attendance. "We think a seminar is the best forum for addressing current concerns," Katz says. "We will explain the possible economic scenarios resulting from the war—some good, some bad. Like shining a flashlight into a dark room, things that we have talked about aren't nearly as scary as those that take us entirely by surprise."
Make contact. Many clients aren't opening their account statements these days, so communicating by phone is paramount. In addition to hosting two educational workshops this month, Carol Rogers, president of Rogers & Co. in St. Louis, is phoning all of her top clients. "The phone is definitely more important now," Rogers observes. "We had a couple of clients say to us, 'I used to think you loved me.' The letters didn't do it for them. I have learned to make even more phone calls."
Just listen. Give anxious clients a chance to vent by asking them open-ended questions, such as: How do you feel about the war? What concerns you most right now? "You may be surprised to learn that their biggest concern is that their grandchild in Omaha has asthma," says Steven Swann of Wachovia Securities in Stuart, Fla. Soliciting concerns face-to-face over coffee or lunch goes a long way, adds Morgan Stanley advisor Troy Sumrall. "Your role is to listen while they get the concerns off their chest."
Talk to war veterans. Your client base can be a vital resource in these uncertain times. Try calling all the military vets in your book and asking them what they remember about the economy during World War II, Korea, or Vietnam. "I have asked veterans what was happening with interest rates and what happened to the prices of food and housing," says Karin Ulrich, an advisor with Harris Bank in Rolling Hills, Ill., outside Chicago. "In many cases, they calm their own fears by remembering those events weren't the end of the world either."
Resources for Tough Times
As the market continues to react to events in Iraq, clients need constant reassurance that you're there for them and taking care of their concerns. Here are some samples of resources for soothing rattled nerves:
Sample client educational letter. Download this letter, written by Daryl Logullo of Strategic Impact, a marketing and PR consulting firm. Send a copy to prospects as well, Logullo suggests. "Providing a lot of in-depth, detailed information to prospects makes them wonder: 'Why isn't my advisor doing this?'"
Market history. History can serve as a compass in these uncharted waters. Show clients how the markets have responded in previous times of war and crisis. (Be sure to scroll down to see both pages of the presentation.)
Market recovery. Inevitably, markets do rebound after periods of adversity. Show clients this handy Ibbotson chart. (Again, be sure to scroll down to see the entire seven-page presentation.)
Draw strength from elderly clients. Older people love to share their wisdom—and often, you can use their sage stories to reassure other clients. Swann called nearly a dozen clients born between 1915 and 1920 and asked them what they learned during the Great Depression and World War II that is applicable today. "The common answer seemed to be: 'We learned what was important, who was important, and that we had the strength to endure,'" Swann reports.
Tap international clients. Talking to clients who've lived abroad for extensive periods could also be an important strategy, Swann adds. Israelis and clients from the Middle East, particularly, have experience living with the threat of terror, and likely have insights that could be useful. "They embrace life, while we're busy embracing our neuroses."
Discussing wartime scenarios
Clients want information about how their portfolios and the economy will perform in the coming weeks and months. No one knows for sure, of course—but here are some advisors' best bets:
Expect a short-term pop. Some advisors anticipate an immediate rise of as much as 20% in the Nasdaq and 10% to 15% in the Dow, similar to the jump following the start of the first Gulf War. "This will probably be short-lived," cautions advisor Ed Gazarian of Quick & Reilly in Boston. "The sentiment probably won't last. I'm still waiting for better economics before committing, but we will probably sell some dogs into the momentum."
Maintain liquidity. Advisors continue to urge clients to keep a major portion of their portfolio in cash or short-term bonds. "The uncertainty of the present situation demands that funds be protected against further losses," says Bill Mullen, a CFP in Park City, Utah. Others concur: "I'm continuing to tell clients to be diversified with a heavy weighting toward cash," asserts Bruce Hagan, a CFP in Tallahassee, Fla.
Watch the price of oil. Oil prices could signal an economic turnaround. Prices are currently in the $35 per barrel range, but in six months, many experts expect them to be less than $20. "If this is accurate, this will have a very stimulative effect on the economy and stock market," remarks Steve Camp, a CFP in Ft. Lauderdale, Fla. "It will be a tremendous injection of purchasing power into the economy—like an instant tax cut."
Anticipate a long-term push. If the war effort goes well and the United States experiences no further terrorist attacks while establishing peace in the Middle East, cash that is now in the sidelines will likely flood the market, leading to a possible long-term rally. "Right now the equivalent of more than 25% of the Wilshire 5000 is loitering in money markets earning less than the inflation rate," Camp observes. "Once the markets start to move up, this idle cash will further push up prices as soon as people realize the market advance is justified."
|
 |
