When it comes to money, people can be tough beasts to educate. Often there are two groups who have a particularly hard time with money – the gullible and the sceptical.
The gullible are the ones who are routinely done over by con artists, scams and ridiculous offerings trumpeting the easy path to wealth. Unfortunately, “no risk, 20% returns” raise no red flags with the gullible and they often find the easy way to the poor house.
Many professional advisers don’t deal with the gullible because they’re usually very overconfident and they don’t know what they don’t know. So I believe it’s in our best interests to promote financial literacy and financial realities whenever we can. Whether they’re our clients or not, it may guide some of the gullible away from the shonks and spruikers who will inevitably prey upon them.
The sceptical are the ones who are routinely questioning everything. Not that this is a bad thing, but it can often combine with a professed knowledge of a better way. Unfortunately, short-term market movements are quickly extrapolated by the sceptical. And worse, “market crash ahead” predictions from stock picking newsletters are given significant credence. At the heart of the sceptics is a little bit of fear, I suspect.
Many of us deal with the sceptical because they still recognise they need help. They’re often our most challenging clients and while they’ll happily defer to our technical expertise, they’re the first to question our investment philosophy the moment any market corrects. Over the past two years I’ve found the sceptical have been vocal during the mid-year corrections professing, “they knew this was coming”. Yet they’re very silent at year’s end after we’ve posted nearly 20% returns (according to the ASX300 Accumulation Index).
I’m proud to say education and regular contact does help. We’ve alleviated the fears of many sceptical clients who are prone to knee-jerk reactions during market jitters.
From the first time you engage with a client it’s important to spell out your investment philosophy, but there’s no sense in ending there. It would be a huge leap to assume any human being fully absorbs everything they’re told in one sitting. This is where regular contact with your clients should be utilised through newsletters, articles or reports you’ve written.
Keeping in contact through email on a weekly or fortnightly basis means advisers can continually help educate clients no matter what the market is doing. Clients are also hearing from the person they’ve trusted to oversee their money, so they can be guided past whatever short term fad or disaster the media is pushing.
This contact also provides an important historical reference point for when markets have been volatile. Archiving articles and reports on your website ensures you can always point to the consistency of your message. And when it turns out the world didn’t end, the sceptics become a little less sceptical.
And hopefully they’ll then turn their scepticism to those blowhards in the media and newsletter salesmen.
Peter is the managing director of FYG Planners. He is a Certified Financial Planner (CFP) who started in the financial services industry in 1981. A specialist in business development, Peter’s role primarily focuses on providing strategic planning advice to FYG Planners on its future direction, improving the technical skill base of the group, identifying business growth opportunities and services that can be developed for use by FYG Planners Advisers.
