Scan the blogs of advisors and you will find few addressing the enormous pain inflicted on clients in recent years.
In fairness, advisors are no different from other small business owners who tend to say their business even when they are not. Advisors always seem to say their assets are growing and they are making money for clients. But in the difficult economy since the financial crisis, it’s difficult to understand why advisors are not addressing the widespread pain being experienced by many of their clients.
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Median household net worth, according to a Federal Reserve study
, plunged 39% between 2007 and 2010, while mean household net worth in the same period declined by 15%.
For wealthier households, the news was not as bad as for the poor.
For households in the 75th-to-90th percentile of net worth, median net worth declined by 19.7% and mean net worth fell 14.4%. For the wealthiest decile of households, the 11% decline in mean net worth exceeded the 6.4% decline in the median.
Despite these dismal statistics, few advisors publicly address the pain suffered by their clients. It seems unwise to be so oblivious.
Advisors trying to attract new clients should want to be authentic and candid about what’s happening by openly addressing the issues.
For the most part, advisor clients are not experiencing financial tragedy. However, children are moving back with their parents after college, BMW 5 Series are being replaced by BMW 3 Series, and pedicures are once every other week instead of every week.
In many households served by advisors, however, the pain is likely much worse. Children are being asked to help pay the mortgage, the BMW 5 Series is not being replaced or is replaced by a Hyundai, and the pedicures are a distant memory. The drop in real estate prices has caused many households to lose their credit lines. Vacation homes are underwater. Many onetime Masters Of The Universe are among the long-term unemployed or settling for jobs once beneath their vaulted status.
It would not be a mistake for advisors to publicly acknowledge the pain in blogs, seminars, and other public venues. By addressing the financial heartache experienced by some clients you will help people. You will attract those in trouble or those dealing with less. It will make you more believable, genuine, and approachable. People like the truth.
When the economy gets better — and it will one day be much better — clients who are now in financial pain that you help are likely to remember what you did for them. It could be an opportunity to create a relationship that can last a lifetime, by offering advice to those damaged by the financial crisis.