With the radically changing political climate the United States is now experiencing, the economic spectrum hasn’t gone untouched. Any given year, experts will debate over whether economic changes are good or bad, but all change needs to be weathered wisely. Financial advisors know this all too well.
In light of these changes, it can be easy for some to get swept away in optimism and to forget their heads while living in a potential future that hasn’t happened yet. Yes, taking risks as a business is necessary but these risks shouldn’t be approached without some sort of faith that one can come out on top.
If you have a client who’s acting overly optimistic about the future, stop them before it’s too late and you’re both out of a job. Approach them how they will best receive it and godspeed!
Use Layman’s Terms
Sometimes, a client will understand the macroeconomic climate changes and how they relate to corporate finance on a simple level, but they’ll only hear what they want to hear in terms of what it means for them. This means they’ll jump into investments without considering the potential negative consequences — which they’re unprepared for — because they’ll be so hyped on the positive ones.
For instance, they may understand that Donald Trump’s policies on tax and regulatory reform will most likely lead to improved growth, but they may not understand that there’s still projected need for caution when investing in stocks.
The fact is that you need to do the dirty work and figure out how long each expense or debt may cause them to pay off, and then explain that to them in layman’s terms. It’s not that they’re unintelligent, but this is your level of expertise, not theirs, so they may not be familiar with the jargon. Clean up your lexicon to be something that someone who isn’t a macroeconomics expert can understand, as to not confuse them.
What This Means For the Company
There should be no time spent beating around the bush. What this investment may mean for the company and whether or not they can risk it is 100 percent your priority in speaking with them. Explain to them what the power of compounding interest is and how the market will or will not work in their favor, especially in terms of bank loans and how the state of the economy affects bank power.
Maybe the bad turns have already started taking place, and your client is losing money as we speak. Tell them exactly that: they are losing money as you speak and unless they start listening to you and doing something about it, their entire business is at stake.
Have a Plan Ready for the Client
When explaining bad news of a trial that’s already come, don’t go in empty handed — have a plan on how your client can get out of this. Meaningful conversations involve brainstorming, quick thinking, and productivity.
It is very important that you know the ins and outs of this situation as well as other historical cases of similar conundrums — try to predict what the market will do. Be an expert on a client’s case, not just on finance in general. Your expertise will encourage them to trust you. Relate their story to others, and bring in cases of saved days with similar plans and struggles. Be a helping hand, not just the bearer of bad news.
When They Still Won’t Listen
We all have been there: sometimes, when you try and help people, they just don’t listen. In that case, all you can do is pick up your things and leave. It’s not your job to save anyone, it’s just your job to advise them and help them. Let people dig their own graves.
Hopefully that won’t be the case, though. If you play your own cards right and people are willing to listen, you should be able to start heading in the right direction.
What have your negative experiences been in advising people financially? How have the most recent changes in the political and economic climate changed your work or that of your clients? Reach out on Twitter and tell me @Robolitious.