Almost every meeting might start with a bit of ‘Trump-talk’ but its advisors’ job to keep clients focused on the long-term
These days it can feel like just about every client meeting begins with a bit of tariff chat. The nature of the US President and these wild policy decisions is such that it takes up all the air in the room. While the first few moments of commiseration can feel cathartic, advisors should stay cognizant of the heightened emotions at times like these. As we see these policy swings make major impacts on markets, it’s time for advisors to show clients that with a good plan and the right portfolio construction, they don’t need to make decisions based on emotion now.
In our own practice, the first reaction we’ve seen from clients to the ongoing trade war has not been a focus on their portfolios. Instead, we’re seeing clients shop Canadian and cancel trips to the United States. The market’s recent downturn has some of them showing a bit of worry, but a quick look at the portfolio can show them that even if they are in a negative position, it’s not nearly as bad as some of the topline market numbers or headlines would have them think.
In moments like these we see immense value in the work we’ve already done to educate clients about the risks and dangers of timing the market. We’ve already spent a long time explaining how difficult it is to accurately time the market, and we’re reiterating that message in this moment. When so much of the market volatility comes down to Donald Trump’s policy, too, we remind them that all these trends could change in just a few days. If and when that happens, we could see markets pop up.
While market volatility and scary headlines might make us want to be on the sidelines, looking objectively we know that we can’t just sit on the sidelines.
Some of the emotional management work we do during periods of volatility involves reframing a concept. When clients come worried about ‘the stock market’ as a singular concept that could go up, down, or ‘crash’ (which seems to have quite a loose definition), we reframe what they hold in equities. They aren’t exposed to ‘the stock market’ singular, they own shares in 13,500 companies. Each of these companies has been vetted for quality over the long-term.
That simple act of re-framing helps clients see the true value of what they hold in their portfolios and lets them know that the tendency in markets is for companies to grow in the long-term. They see their holdings as businesses, too, and understand that if a business shows brief signs of weakness despite strong fundamentals, you don’t sell it. Thinking of stocks as these intangible liquid things makes the decision to panic sell easy. Thinking of them as businesses gives investors just the pause they need.
As advisors communicate with clients in this moment, I would always stress the value of consistency. Use the existing tools and channels that your clients are used to as you drive home the right messaging. On our team, we use a weekly podcast and weekly videos. If we need to add another video or podcast mid-stream we can do that, but we’ll use those channels to manage broad communication. If we suddenly change tack and start calling our clients directly, for example, we know that would panic them. They’d see our number on the caller ID and think that there’s a real problem now.
The way we communicate brings us back to that ‘Trump talk’ so many of us are having these days. While some advisors may tell you not to mention Trump or tariffs with your clients, the reality is these subjects are going to come up. What we need to do as advisors is acknowledge the topic, engage a bit, but pivot to a conversation about how the portfolio is constructed, the way it can protect against moments like this, and why we can’t let the emotional turmoil that comes in times like these sway us into bad decisions.
