Aircraft passengers who have experienced severe turbulence know the feeling. Initial unease gives way to fear as the bumps get bigger. But then comes the calming voice from the cockpit, saying the rough patch was anticipated, the disruption will be temporary, and, in the meantime, everyone should stay seated with belts fastened.
For most of us, we tend to never think about the pilot outside those times on a flight when we are comforted to hear that turbulence is just part of the price of flying long distances from one corner of the world to another. Pilots, after all, are trained to understand aerodynamics and how to navigate around rough spots.
This is akin to the comfort that clients find in financial advisers in volatile markets. No- one likes to see shares and bonds going down, but the bumps are easier to take under the care of a professional who has first set expectations for the journey, understands how markets work and has the tools to help clients reach their destinations safely.
While not even the most experienced pilot or adviser can make turbulence go away, they nevertheless can provide people in their care with the confidence to navigate periods of uncertainty and to make good long-term decisions, separate from fear.
In fact, the value of advice is never demonstrated so keenly as when clients are able to tell themselves: “This is tough right now, but I feel I’m going to be OK.” They feel like that because they watched the pre-flight safety demonstration, they know the plan for emergencies, and they have complete confidence in the professional at the pointy end.
Advisers, like pilots, are able to do this because they understand that conditions can change, often without warning. They also know what they can and cannot control. In the case of financial advice, they can design a plan made for multiple contingencies and built around a highly diversified portfolio targeted at the long-term drivers of return. Finally, they know how to communicate the value of discipline in all environments.
So, a passenger in severe turbulence might wish for a parachute. Likewise, the investor during a tough market might just want to bail out. The value of the adviser at such times, as with the pilot, is to keep passengers/clients in their seats and to convince them to stick with the plan, which often can seem counter intuitive.
All of this does not just require technical knowhow, but a sophisticated understanding of human communication. People at their most fearful and emotional tend to be immune to appeals to reason, so the first step is recognizing how they feel. “Yes, it’s bumpy right now, but we built this turbulence into the plan, and it won’t last forever.”
Sometimes the plan needs to be adjusted. A pilot may take a longer route to navigate around turbulence. An adviser might use the opportunity to rebalance the portfolio and revisit the asset allocation, in consultation with the client.
Ultimately, by delivering a great client experience in conditions good and bad, the adviser builds trust and confidence with clients. This, in turn, helps the adviser build a successful business that generates greater referrals.
In this sense, the reassurance offered by the “voice from the cockpit” in turbulent times is a hugely under-rated source of value.
Next steps
If you have any questions/thoughts in relation to this article or would like more information, please contact Gordon Thoms or David Conte at Calibre Private Wealth Advisers on ph. (03) 9824 2777 or email us here.
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