Jacqueline Soong, a 27-year-old certified financial planner at Desjardins Financial Security Independent Network in Toronto, didn’t like what she was seeing when stock markets took a nosedive in late March as the economic impact of COVID-19 took hold. No wonder, then, that her clients – 90 per cent of whom are under the age of 40 – were feeling particularly nervous.
“I had a couple of clients who said [at the time], ‘I think I need to pull my money out [of my investments] because it doesn’t seem like this is going to end,’” she says, noting the level of fear these investors were facing. “This is the first correction they’ve ever [faced].”
Fortunately, other than a few who are out-of-work massage therapists, most of her clients are still employed. But considering that millennial Canadians have been some of the hardest hit in terms of unemployment, it’s no wonder most are feeling rattled.
That’s why it’s more important than ever for financial advisors and financial planners step in and assuage these investors’ nerves, says Kurt Rosentreter, senior financial advisor at Manulife Securities Inc. in Toronto.
“In times like this, I’m 80 per cent psychologist and 20 per cent financial planner,” he says.
Mr. Rosentrer doesn’t see his role as someone who’s talking inexperienced investors down from the ledge, but rather, getting them to see the forest for the trees. As such, he advises them not to “get caught up in the moment, as bleak as it feels.”
So, how do you help millennials keep calm? Here are six tips from a few advisors who serve these clients.
Keep it together
Bretten Roissl, a 26-year-old financial advisor with Desjardins Financial Security Independent Network in Mississauga, works alongside his father, a 37-year veteran in the financial services business. He vividly remembers listening to his dad talk to clients in 2008, when markets tanked as a result of the global financial crisis.
“One thing that was really good was watching my dad [at the time], how calm he was throughout it all,” he says. “You really have to be a guiding voice, not only for yourself, but so everyone around you gets that vibe. That’s the time to be calm – when everyone else is freaking out.”
Flip the script
If emotions are still getting the better of his inexperienced clients and they’re asking to sell and sell some more, Mr. Roissl treats the clients calls, texts or e-mails as opportunities to educate. It’s about coaching, he says.
“We flip the script. I say, ‘Hang on. You want to sell on a down? This is the opportunity we’ve been waiting for since 2008. Let’s seize the moment. Forget the emotion.’”
Discuss the whats and whys
Clients can become even more anxious when they’ve forgotten what they’re invested in – and why. So, Ms. Soong says she likes to take time with stressed out clients to go over the companies in their portfolios and discuss why they are likely to do well in the long-term. For example, maybe the person has invested heavily in technology companies that help employees work from home.
“You have to tell them what they’re investing in first, help them understand why these companies are going to do well in the next three, five or 10 years, then say, ‘If you do have extra money, now is a great time to invest,’” she says.
Now is also a good time to show clients how markets rebound after recessions. Mr. Rosentreter says he can’t count how many times he has discussed how quickly and horribly the 2008 market dropped in six months, only to bounce back within three years.
Staying invested during that dip and swing meant taking advantage of one of the greatest stock market upswings in history. Then, to make his point, he says he pulls out the numbers.
“When you show them the data to back it up, they get it real quick,” Mr. Rosentreter says.
Concentrate on the future
The pandemic has put millennials in the right mindset for preparing for future setbacks and getting their financial houses in order.
Ms. Soong says she has long advised young clients to build an emergency fund for tough times – and has been thrilled that so many of them have nest eggs of $10,000 to $15,000 to fall back on now.
An emergency fund is a better fit than a line of credit for millennials who don’t yet have home equity, she says, calling a line of credit “a very slippery slope” – particularly for those already paying off their student debt.
Sympathize or empathize
Not all advisors can fully relate to younger clients, but that doesn’t mean you can’t connect on a human level. By admitting you’re frazzled by the current circumstances and uncertainty too, you’ll likely build bridges.
“It’s worked well for me,” Ms. Soong says. “I tell them, ‘Hey, I had plans on buying a house in the next year, and as of right now I’m not able to do so because I don’t have my 20 per cent [down payment]. But you know what? I still live at home and I’m not concerned. We’ll get through this.’”