Brokers, Advisors Reach for New Business in Crisis Market
Some advisors were ready for markets like this.
“Stock market corrections of 30% are more common than most of us realize,” the Morgan Stanley advisor wrote in e-mails Thursday to about 4,000 of his LinkedIn followers. “Historically, these corrections have always presented a terrific buying opportunity….If your portfolio could benefit from a review by a new set of eyes, give us a call. We look forward to hearing from you.”
He accompanied his pitch with an article written several years ago chronicling cycles of corrections and counseling investors in high-dividend companies to hold tight when the next crisis inevitably occurs. (”Pay a Great Advisor to Help You Do Nothing,” a subhead says.)
“I was frankly waiting to get this out,” said Poch, a Washington, DC-based advisor in the wirehouse’s private wealth unit for the very rich. Morgan Stanley had pre-approved the article in January, he said.
Poch, who joined the wirehouse in February 2017, said his clients aren’t panicking because his correction conversation is a staple for them—and because he had allocated 20% to 25% of most of their portfolios into money markets.
“I missed a lot of the bond market move up,” he conceded, “ but helping them miss the big stock market ‘down’ makes me feel pretty good.”
Poch’s “Say It Like It Is” correspondence with LinkedIn followers usually generate two or three inquiries from potential clients, though he said his audience is comprised largely of clients, friends and family.
Like others, Poch has been assuring clients that the pandemic-induced market crisis is not as fundamentally chaotic as 2008, when banks were failing, liquidity had dried up and brokers feared picking up client calls.
According to panelists on a webcast Friday titled “Calming Anxious Clients About Coronavirus,” however, many advisors are still abdicating their responsibilities at a time when customers are craving reassurance.
“You know what all your competitors are doing? They’re hiding in bunkers because they have no idea how to navigate this,” said Carl Richards, a certified financial planner and director of investor research at Buckingham Strategic Wealth.
Daniel Crosby, chief behavioral officer of Brinker Capital, said advisors have little choice but to ask clients how they are coping with pandemic fears and to control any panicky trading instincts.
“You need to remind your clients that part of [your] goal….is to keep [them] from making a handful of bad decisions when times get really tough, that this is why you hired me,” he said. “Behavioral coaching is indeed part of your value, and this is it. Tell them, ‘This is my Super Bowl. Get in touch with me.’”
He also warned against sending out firm literature recapping forecasts and handicapping where the markets might go, saying clients primarily need reassurance about their personal relationship with the advisor.
Some advisors, to be sure, said the crisis presents an opportunity to re-engage in the financial planning basics.
“Right now is a very powerful time to start to do some of that financial planning because you can see how your plan looks at about a 25% discount to where we were a couple of weeks ago,” said Brandon Harvey, founder of Legacy Wealth Management Group, an LPL-affiliated RIA that manages about $100 million. “Instead of freaking out and trying to make changes to a portfolio, let’s run a financial plan and let’s see how this can change your future.”
The current crisis also opens opportunities to build some new business, Richards said on the webcast. “It’s not hard to say to a client or friend, ‘I’ve got a Zoom account,” he said. “And If you want to invite any friends or family, I’ll make room for them.”
Poch, for his part, is not only counseling clients and prospects through social media to pick up some blue-chip bargains, but eyeing high-yield distressed debt issues. They’ve been slammed, but with the help of hard-bargaining vulture investors should creep up in value within three or four years.
“We’ve seen this show before,” said Poch, who worked at several trust companies as well as LPL and other wirehouses prior to joining Morgan Stanley. “It’s like watching a rerun of “The Great Escape.’”