4 Ways Advisor Empathy Can Build Client Trust During Volatility

Last Edited by: LPL Financial

Last Updated: June 16, 2022

4 Ways Advisor Empathy Can Build Client Trust During Volatility

The economy is indeed slowing, but it isn’t headed for a recession any time soon in our view. Think about this, this would be the first recession ever to have record earnings and a booming jobs market.

- Ryan Detrick, LPL Chief Market Strategist

Financial advisors who empathize with clients, better understand their clients

There’s nothing quite like a dip in the stock market to make investors fear that their hopes, dreams, and expectations are in just as much jeopardy as their portfolio. When that fear sets in they’ll look to you, their financial advisor, to advise them in managing market volatility and ease their worries. These are the moments that separate the good advisors from the great advisors.

Why? Because, these moments are pivotal opportunities to reiterate your true value to investors by listening to them and empathizing with them. These are the moments that turn new clients into lifelong clients simply because, during a time they felt uncertain, you made them feel heard and understood. And clients who feel understood by their advisor feel more confident in their advisor.

4 ways empathy helps advisors build trust with clients during market volatility

An advisor who takes an empathetic approach in financial planning can see positive results in all seasons of their client relationships, but especially during seasons of market instability. However, for advisors who haven’t put empathy at the forefront of their client interactions, it’s never too late to start. Putting empathy in practice isn’t just for your investors’ benefit. As an advisor, employing empathy helps you in a variety of ways. 

1. Empathy helps you anticipate client needs and behaviors.

A sudden downturn in the market can send investors into a frenzy of emotionally-fueled behaviors. They may obsessively check their accounts or monitor the news, both of which are readily available 24/7 and just a click, or refresh button, away. Empathy helps you shift into your clients’ mindsets, without ignoring or avoiding investing emotions, but experiencing them objectively. It’s easy to forget that, while you may be aware of the normal ebbs and flows of the market, your clients probably aren’t. 

Active communication between financial advisors and clients is crucial at a time when a single tweet sways economic conversations. Social media shares are a trend LPL Financial Chief Market Strategist, Ryan Detrick, addressed recently through LPL Research noting one would “have to wonder how serious they are when they quickly change their tune a day or two later.”

Despite the ever-present commentary, it’s a good time to remind newer investors that you are taking these financial shifts seriously. And, you will promptly let them know of any news or activity that could affect their investment portfolio, or require them to reassess their risk tolerance. For those longtime clients, you may have a better idea of how they'll react to market shifts and which ones may need a bit more reassurance, especially if they've had any major life changes or it's been a while since you connected. Set aside the right amount of time for each client to provide updates and reassure them they're in good hands.

2. Empathy helps you better support and discern client's decision making.

During a time when it may be essential for clients to stay invested in their goals and continue making sound financial decisions, an empathetic tone is needed. Some clients may go through a cycle of emotional investing stages fueled by market fears. They may make impulsive financial decisions that feel right in the moment, but drastically reduce their future investing potential when the market recalibrates. Alternatively, some investors may find themselves reassessing their values during instability. 

For example, recession concerns and rising unemployment numbers can affect investors differently. While one investor may move to more conservative portfolio options, another may feel motivated to revise their financial goals and future plans to be more aggressive. Certain economic environments may be ideal investing opportunities for clients with a higher risk tolerance. According to LPL Financial chief economist Jeffrey Roach, the economy is “slowing rather than shrinking”.

Additionally, Detrick’s economic insights shed more light on how conditions can change as data continues to emerge each day. “The economy is indeed slowing, but it isn’t headed for a recession any time soon in our view,” he says, adding, “… this would be the first recession ever to have record earnings and a booming jobs market.” Essentially, empathizing doesn’t always mean seeing the negative with compassion, sometimes it means recognizing the positive with compassion.

3. Empathy helps you help your clients know they aren't alone.

Investors may feel they're the only ones worrying and losing in the financial market battle, but a deeper look at investor psychology shows many investors fall into similar patterns during volatility. With rising inflation rates, worldwide supply chain issues, and ongoing questions around how the Federal Reserve will adjust rates to combat ongoing challenges, worries are anything but abnormal for the average investor.

Bottom line, clients are just people. They have each experienced their own unique life circumstances and experiences just like you, their advisor. Despite how unique their experiences may be, it’s always comforting for investors to know they are not alone and their feelings are normal and valid. This simple approach can have a massively positive impact on your client relationships and prevent future worries during fluctuations. 

4. Empathy helps you stay proactive as an advisor.

Empathy is an action noun, or it should be. Understanding your clients on a deeper level can be incredibly motivating during challenging times. Again, uncertainty can lead to clarity for clients, and that could mean they’ll be more open and honest in client conversations moving forward.

While active communication with your investors is essential, the proactive measures you take in preparing for that communication, and truly listening to clients, is just as important. Take steps to make the most of client conversations so you come away with new and valuable information that better helps you serve their needs.

Embracing empathy strengthens your financial practice

When volatility happens, don't be afraid to lean into an empathetic approach. It will allow you to effectively demonstrate your value and support to your clients through both your industry capabilities and emotional capacity. The negative emotions clients may experience during tumultuous economic times are temporary, but the care you give them through these times will leave a lasting impression.

For more tips on how to approach uncertainty with your clients, download The Advisor's Guide for Helping Clients Weather Market Volatility. In the guide, you’ll find a step-by-step approach to developing a strategic communication plan and streamlined efforts to keep clients informed and reassured until you've made it through the challenges.



The content is designed for licensed financial professionals. There is no assurance that the strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risk, including loss of principal.

At LPL Financial, the terms “financial advisors” and “advisors” include registered representatives and/or investment adviser representatives affiliated with LPL Financial LLC, an SEC registered broker-dealer and investment adviser. 

Weathering Market Volatility

Download LPL’s white paper, The Advisors Guide for Helping Clients Weather Market Volatility, for more tips on how to approach volatility.

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During this time of volatility, effective questioning can provide new and valuable information that better helps you serve your client needs.

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