 |
By Alan Parisse, MBA, CSP, CPAE
January, 2002
Calling the first few years since the turn of the Century “turbulent times” is like calling the Grand Canyon a hole in the ground or the Pacific Ocean a nice little lake. World politics, market forces and technology seem to have ganged up against the quest for a tranquil, predictable life – or a stable investment environment.
Since the turn of the Century, financial professionals have had to deal with monstrous acts of terror, unprecedented financial scandals and pathetic market performance. Together these events and conditions have conspired to alarm investors and erode trust in both financial markets and in the professionals who represent them.
It Ain’t Over ‘till It’s Over
The question is how many more crises will pop up before the good times roll again? Since no one knows, the tendency for investors and advisors alike is to run and hide.
Don’t do it and don’t let your clients do it. If one can muster the energy and perspective to look beyond the latest crisis and find the courage and common sense to seize the moment, difficult times become the fertile breeding ground for future success.
Dig Your Foxhole and You Dig Your Grave.
When World War II started, many generals readied themselves for World War I. General George Patton was one of the first to recognize that technological advances in tanks and artillery would make a replay of trench warfare impossible. His advice to his GIs still holds true for those dealing with a fast moving crisis: “Dig your foxhole and you dig your grave.” When the ground is shifting, standing still rarely works. One must take action. While that can mean advance or retreat, it pays to notice two things:
1. If you keep retreating you lose.
2. If everyone else is retreating, it is usually time to advance.
Get Ready for the Next Crisis
No doubt a crisis can create pain, loss and confusion. It can also create opportunity. To seize whatever opportunity might present itself usually requires preparation. Preparing for the unknown may sound like a contradiction in terms, but it isn’t. When asked what he attributed his extraordinary ability to give extemporaneous speeches, Winston Churchill’s one word answer also seemed to be a contradiction: “Practice.”
Establish Your Credibility—You’ll Need It
Credibility creates the context within which the investor/advisor relationship either thrives or fails. A reservoir of credibility is critical in a crisis. Importantly, a crisis is also an opportunity to gain credibility. It is a time to show your stuff and win a “battlefield commission.”
Control Yourself
When a crisis occurs, hold your emotions in check and focus on your duty to your clients, family and community. Analyze the situation and lay out your plan of action. Remember what the historian Jay Winik said: “Second rate (leaders) are … shaped, prodded and manipulated by the forces of history. Great leaders find ways to bend those forces to their goals.”
Consider the Individual
When contacting clients, consider their individual situation and emotional makeup first. Some will want you to zero in on financial implications immediately. Others might be offended by your lack of human sensitivity, especially if the crisis involves the loss of human life. Try this approach. First, acknowledge the seriousness of the situation. Then, make it clear that as an advisor, your responsibility is to your clients, to sort out the financial implications, protect their capital and perhaps even enhance their position.
Ask for Referrals
In a serious crisis, many financial professionals hide in foxholes. Your clients have family, friends or colleagues who need your help. Do your job and help them. Doctors who find a patient with an infectious disease ask, “Do you know anyone else who might have been exposed and might need treatment?”
Know Your Client
Get ready for the next crisis by gathering and recording information that goes beyond your client’s financials. Find out their hopes and dreams, fears and concerns. Don’t forget the personal information. If your client bought a house with a pool two weeks before a sudden run up in energy prices, they will appreciate your remembering. Of course, during a crisis, you will learn even more about your clients. Don’t forget to pay attention and jot down a few notes.
Know your Product.
Clearly a crisis tests your knowledge. You will need to know your stuff, but you will also want to be sensitive to each client’s ability and willingness to deal with details. In a sense, you should be ready to choose between two hats: one as an expert who knows how to make a watch; the other as an advisor who tells them what time it is. It is an essential element of an Advisor’s role in a crisis to know the issues at hand so thoroughly that he or she can distill them down to their understandable essence.
Keep It Simple
While you had best know your stuff during a crisis, you probably should forget beta coefficients and instead use simple arithmetic and terms your client can understand and appreciate. The importance of the latter role was underscored by Supreme Court Justice Oliver Wendell Holmes, Jr. He said, “I would not give a fig for the simplicity on this side of complexity, but I would give my life for the simplicity of the other side of complexity.”
Sell Concepts and Benefits
Frame the situation to give clients perspective. Remember your clients probably get their information from television news – a medium not known for tranquil, reflective reporting. You should be calm, showing clients that while this may be a new set of facts, you have dealt with sudden change before.
Communicate Your Enthusiasm, Certainty and Commitment
A crisis is no time to celebrate, but you can still express your underlying enthusiasm for your profession and the opportunity it gives you to serve clients in a time of need. Communicate that you and your firm are on top of the situation.
Take Risks
Not with your clients’ money, but by stepping out on the limb, pushing up against your comfort zone and, most of all, by taking a position. Go beyond just asking clients to reposition assets – tell your clients what in the world to do.
Taking a chance also means actively prospecting during a crisis. Make the time to do a few prospecting calls every day to let people know that you and your firm “have developed a plan to help people position their assets to (protect themselves from …) or (maximize the opportunities created by …).”
Be Decisive
Call your clients before they call you. Don’t wait until you have all you ducks in order. As Cervantes said, “Delay always creates danger.” For especially urgent situations in which you cannot possibly contact all your clients, consider having a hotline that clients can call and hear a recorded message of your latest reading of the situation.
Whatever you do in a crisis, be decisive. Don’t end up like the donkey in mythology, the symbol of indecisiveness, who starved to death equidistant from two bales of hay.
© Copyright 2002. The Parisse Group, Inc.
 Back
to Featured Articles
Questions? Call - (303) 444-8080
or Contact
Us
|
