The US election and a range of other headlines are worrying clients, one advisor talks about how he controls that noise for them
Try as we might to ignore it, when a US election takes place Canadians pay close attention. Whether it’s with an eye to our economic interests, our friends and family south of the border, or simply to watch what is inarguably some very compelling television, many Canadians are glued to the news and reading daily headlines about this race. The noisy US election cycle exacerbates a wider problem that so many Canadians face now: an inescapable avalanche of information, often intentionally designed to scare or enrage us.
Advisors have to manage some of the impacts of that avalanche. The fears that a news piece or election cycle might raise in clients could impact their risk tolerance or their long-term goals. Scott Starratt’s approach is to listen, offer facts and evidence, and lean on his longstanding relationships and track record of returns when clients seem to be overwhelmed by the noise. The investment advisor and portfolio manager at Starratt Wealth Management of Canaccord Genuity explains how other advisors can support their clients in a time when the news seems to only be getting louder.
“I think that letting them talk is the first step. Letting them express their fears and emotions, even if they’re not that logical,” Starratt says. “Once they’ve been able to communicate and share, they’re in a place where more facts can come into play. Once you remove the emotion from it, people get a bit calmer and they begin to understand. At the same time, by listening to them they feel heard, and you may need to tweak the portfolio over their valid concerns.”
Starratt notes that the issue currently occupying mental space for a lot of his clients is the US election. While some are happily ignoring that news, he says that many retired clients or those with more time on their hands are paying close attention. He notes that the most visceral responses to the news he hears are often from clients who hold negative views of Donald Trump.
A US election is always a cause for valid concern among Canadians. A potential change in the government of our largest trading partner should always be something to pay attention to. Clients will come to Starratt asking how the election may affect them. He is quick to show the range of possibilities, including impacts to the oil and gas industry as Starratt is based in Calgary. His broad takeaway for clients is that this election cycle will likely spark some volatility, but that there is opportunity to be had in a volatile environment if you stay focused on fundamentals.
When clients get worried about the macro picture, Starratt also strives to keep them focused on the day to day. Reminding them of the reality that they should continue to be fine so long as they keep working and remain invested. His own concern is that unemployment rates continue to rise to worrying levels, but while his clients are still earning and generating returns he can use that as a touchstone to refocus their attention.
Returns are key to this strategy, too. Starratt says his clients have outperformed the targets set by even the most conservative of plans. That positivity can help dispel the fear caused by negative headlines. It’s his job, though, to stay disciplined in rebalancing their portfolios to prepare for any volatility that may come.
While Starratt will listen closely to client concerns and incorporate their feelings, he is also keenly aware that facts and truth have become far more malleable these days. If he ever hears clients saying something that he knows to be untrue or a product of misinformation, Starratt is not afraid to call that out. He does so politely, with a smile and a willingness to listen, but he offers a counterpoint when he knows something to be false. Starratt says that he can offer that counterpoint because he has known most of his clients for decades. The length and strength of the relationship gives him some license to push back.
Advisors meeting with clients over the coming months will hear their concerns about the US election, the economy, or whatever new issue grabs media attention. Starratt says that a disciplined approach built around the financial plan can be very helpful in cutting through the noise.
“Keep referring back to the plan, because now’s the time when you should be exceeding the plan, remind people of that,” Starratt says. “Remember that volatility breeds opportunity, even if that opportunity can be best captured by doing nothing. Communicate the investment strategy explaining how things have worked and how they’re protected if bad stuff happens. Have open communication be and be articulate.”
Disclaimer
Scott Starratt is a Portfolio Manager at Canaccord Genuity Wealth Management. His views, including any recommendations, expressed in this article are his own only, and are not necessarily those of Canaccord Genuity Corp.
