In uncertain times, clients can often need that extra bit of reassurance. While the human touch is essential here, paraplanners can use technology to help clients see the bigger picture, says Steph Willcox, Head Actuary, Dynamic Planner.
In today’s fast-paced and sometimes turbulent economic environment, financial headlines can often provoke emotional responses from clients. Whether it’s news of a market downturn, potential budgetary policies, changes in interest rates, or general uncertainty, clients may feel compelled to react quickly – sometimes impulsively.
Paraplanners can help clients stay focused on their long-term financial goals and ensure they’re making decisions that align with their broader plans. One of the most effective ways this can be done is by leveraging technology that allows clarity, reassurance, and data-driven advice.
1. Clarifying Long-Term Goals with Scenario Analysis
Sometimes it can be difficult for clients to see beyond short-term market fluctuations. They can be refocused by seeing how their long-term financial goals are protected in various scenarios. This can include showing how long their portfolio lasts under poor market conditions, or even what their plans look like if they suddenly have an unexpected event – either an increase in spending, or a decrease in income, and the flexibility their financial plan has if this were to happen.
These tools help clients visualise how their portfolio might behave during volatile periods, reinforcing the idea that their financial plan is built to weather such storms. By showing clients that their strategy is designed to handle different market conditions, and life events, paraplanners can provide much-needed clarity and reassurance.
2. Assessing Risk Tolerance and Adjusting Portfolios
A key factor in managing clients during times of uncertainty is ensuring that their investment strategy aligns with their true risk tolerance. Often, clients may feel the urge to take a more conservative approach when markets are volatile, which could lead to over-corrections in their portfolio.
Using risk profiling tools within planning software, paraplanners can assess whether a client’s risk profile is still in alignment with their current investments. These tools help create a clear picture of the client’s comfort level with risk and allow paraplanners to suggest adjustments where necessary, ensuring the portfolio is balanced and aligned with long-term objectives.
For example, if a client’s risk appetite is skewed by recent market fears, paraplanners can easily assess and demonstrate how their portfolio is positioned against their risk profile. This objective, data-driven approach reassures clients that investments are in line with their risk tolerance, rather than reacting based on temporary news-driven emotions.
Alongside attitude to risk it will also be important to recognise a client’s capacity for risk, as this may limit the amount of risk a client is able to take, even if they are willing to take more.
3. Demonstrating the Power of Diversification
When a particular market sector is making headlines, clients may become overly concerned about their exposure to that sector—especially if they’re heavily invested in it. One of the most effective ways to mitigate this is by reminding clients of the importance of diversification.
Financial planning software can quickly illustrate how diversified a client’s portfolio is across asset classes, sectors, and geographies. By reviewing these reports, paraplanners can help clients see that their portfolio isn’t overly reliant on any single investment.
For example, if media coverage is focused on a downturn in the technology sector, paraplanners can use the software to show how the client’s portfolio is diversified across other sectors or asset classes, reducing exposure to the risks of any one market. This kind of analysis may help clients stay calm and focused on their broader strategy.
4. Proactive Communication with Real-Time Updates
Proactive communication is essential in managing client anxiety, especially when market conditions are in flux. Financial planning software allows paraplanners to track and communicate with clients regularly, providing timely updates on portfolio performance and progress toward long-term goals.
Whether it’s through automated reports, client portals, or personalised alerts, paraplanners can use these tools to initiate conversations before clients react to news that may worry them. Regular check-ins and updates help keep clients informed about how their plan is progressing and offer reassurance that their financial strategy remains on track.
By proactively communicating and offering updates, paraplanners can foster trust and reduce the likelihood of clients making impulsive financial decisions based on media-driven narratives.
5. Collaboration with Financial Planners for Cohesive Advice
Effective paraplanning often requires close collaboration with financial advisers to ensure that the client’s financial plan is comprehensive and aligned with their goals. Financial planning software facilitates this collaboration by providing both paraplanners and advisers with a shared platform to access and update client information.
With real-time data and portfolio analysis tools, paraplanners and advisers can work together to adjust the client’s financial strategy in response to changing market conditions, ensuring that any recommendations are well-considered and aligned with the client’s objectives. This collaborative approach ensures clients receive consistent advice, regardless of the external pressures they may be facing.
When clients are under the influence of macro-economic news driven pressure, paraplanners play a critical role in helping them stay focused on their long-term financial goals. Technology offers invaluable tools to model scenarios, assess risk, demonstrate diversification, and keep clients informed. By using these tools to provide clear, data-driven insights, paraplanners can guide clients through periods of uncertainty with confidence, helping them make decisions based on their true financial plan.
Ultimately, the goal is to empower clients with the information and reassurance they need to stay on course, and the right technology can make all the difference in achieving that.
Main image: towfiqu-barbhuiya-Q69veNk1iJQ-unsplas
