Talking About Recessions with Your Clients


The topic of recession has been a tense one in 2022, dominated by murky political arguments and definitions. Regardless of how your clients individually define recession, some degree of fear is the norm when it comes to personal financial plans. They’re trying to figure out what a recession will mean for their finances and retirement plans, as well as how to best prepare for what’s to come.

As a financial advisor, your clients will be looking to you to understand the recession and what it means for them. While these conversations are challenging, they’re also incredibly important. Strengthening a trust-driven relationship is a matter of being prepared. Here are a few key principles for you and your team to follow while discussing recessions (or the possibility of them).


Key Principles for Discussing Recessions with Your Clients

These hard conversations aren’t usually why you chose to become an advisor, but they’re necessary. Your clients are hearing information from multiple agenda-driven sources, and it hinders their sense of clarity. You are in a position to calm their fears while also giving them accurate, honest information. Whether you’re having conversations now or preparing for them in the future, keep these things in mind:


Place an Emphasis on Pre-Emptive Conversations

The first thing you want to do about these types of conversations is to have them early. Have them before your clients find a reason to panic and their willingness to trust is not high. If you keep your clients informed and educated on the principles of economic uncertainty and recession, they will be prepared and level-headed when the time comes. Instead of listening to fear-mongering and getting caught up in gossip and uneducated remarks, they’ll be focused, knowledgeable, and ready.

Give your clients practical, transparent information on what could be coming and give them guidance about what they can do to prepare as a household. Show them how your help with their planning has prepared them in some ways to ride out the storm.

By being honest, providing information, and giving them practical steps of preparation, your clients will be free from fear and able to ready themselves for what’s to come.


Focus On Honesty, Not Just Preventing Panic

Odds are that you are not your clients’ primary source of economic news. They’re inundated by social media, television, and publications full of controversial opinions. Even more challenging is that the current media landscape is built on tension, not trust. Your relationship with your clients needs to be proactively different.

Trust isn’t built on always having the right answers – it’s based on honesty with wisdom. Your clients aren’t looking for empty platitudes aimed to calm them down. They need a personalized perspective that addresses their fears.

All that type of talk does is either fail to prepare people for reality or amp up their fear tenfold. Your job is to provide clarity. To help them understand the reality of what an economic downturn could mean and what they can do about it.

Give honest, accurate, level-headed information and always emphasize the long-term plan first, which informs their short-term decisions. Your clients need to be aware of the potential impacts of decisions without either fear-mongering. Clarity is the best antidote to panic. As you share and advise, they will come to value your transparency. Help them as they begin planning for a future of economic uncertainty, and regularly evaluate their risk factors to ensure they are taking all necessary precautions.


Focus on Personal Concerns, Not Headlines

The number one fear that people have about recession and economic downturn is how it will affect them. They’ve spent lots of time creating a financial plan and building their portfolio, and now they’re concerned everything is going to change and their plans won’t provide the same measure of stability.

First, demonstrate how their financial plans already take high inflation and economic volatility into account in the big picture. While their plans can’t guarantee that they are prepared for everything, knowing you’ve helped them prepare can take the edge off of their panic. Second, help them understand their contingency plans looking forward. Show them the short-term decisions that may need to be flexible in times of recession. Press your conversations to make sure they’re asking all the questions they can find to remove blindspots.


Use History to Provide Clarity (But Not Certainty)

While every recession feels like impending disaster, it’s easy to forget they’re nothing new. They are a challenging but natural part of our economy. It’s happened before and it will happen again.

While you can’t promise future results, you have access to storylines of history. That’s why it can be helpful to use economic history when you’re talking to your clients. Show them different times when there has been turbulence in the market and when there have been full-blown recessions. Discuss what that looked like and what essential financial principles were used during those times to help people through.

With these examples, you can look at different patterns of growth and retraction, comparing them to their financial plan. Show them how they are set up to handle these issues and discuss any other potential failsafes you can add to their plan to help. Also use history to show your clients that recessions end. Whatever is coming may be a challenge, but they will get through it and the market will experience an upswing again.

Overall, use your conversation to showcase truth, give them understanding, and to help them prepare. If, and when, the time comes, they’ll be ready.


Preparing Your Business for Potential Recessions

Few industries are as hard hit as financial planning when it comes to market turbulence. The best way that you can prepare is to build your business around efficiency and excellent client service.

That is the foundational purpose of WealthPlan Group – to provide exceptional support to advisors as they grow (and protect) their business. With available support like investment management, back-office support, and an innovation-focused community, WealthPlan Group advisors are empowered to thrive.