I was reading this quote usually attributed to Buddha which says, “Pain is inevitable but suffering is optional”. Life is a potpourri of experiences and tendencies of the mind and pain seems to be the centre of all of this. We are all navigating through variety of pains in our life. But, pain is the response of our mind on how we perceive the damage to our being. The damage may be externally motivated but our own interpretation of that damage makes it into a suffering.
My focus of today’s post is not on any spiritual plane but the real damage in financial portfolios caused by the market/economic forces. My sincere effort through this writing is to benefit my brethren advising their customers in financial investments. Majority of us have good intentions of helping our customers achieve their financial goals. We are constantly balancing our actions based upon client’s changing needs, greed, fear and market realities. However, when the storm comes, it impacts us all. The degree may vary but the pain is felt by all.
I am sharing with you some practical tips on how to help your clients come out of this pain and manage their psychology. Many investors would want to “Sell” and get out and swear never to come back into market related investments. Those who have seen some cycles of investing will be better equipped to handle this pain. However, in general, some of the stages I am enumerating below are universal in nature. Everyone who is going through some kind of pain or has suffered a loss goes through these emotions. Without further ado, let me dive straight into these.
Stage 1- Disbelief: How could this happen?
This is the first stage where the aggrieved is shocked. He wants to call you many times (I am going to use the term “He” to refer to the aggrieved person, please interpret it as gender indifferent). He will also check with his friends and others to see if they are in the same boat.
Suggested Response: Responsiveness and accurate update of facts
You will contribute to his anger if you delay in responding or if the facts around his portfolio are inaccurate. He needs latest information. Invest some more time.
Stage 2- Denial: This can't happen!
Denial is usually happening alongside disbelief. There is also self cursing for giving in to his Greed and falling into the trap of making more and the temptation of making some quick money. Depending upon the level of his attachment with money, his (or her) upcoming financial goals that were to be met, an overriding sense of uncertainty and not feeling in control, will be his dominant emotions at this stage. To make the matters worse, all newspapers and electronic media will be projecting bad news. All sorts of rumours will be floating in the market to add fuel to the fire.
Suggested Response: Acknowledge the emotions of his customer
Statements like “I understand what you are going through” help you connect. Avoid adding "But" after this sentence as it nullifies all you said before. Instead, use sentence like "with your permission, may I add a perspective or offer an explanation". Give the man some control by seeking permission. Please don't fake it, put yourself in his shoes, feel empathy.
Stage 3- Fixing or shifting blame: Why did this happen?
Also known as 'Psychological Projection', now he is ready to shift the blame onto you. He has done his share of contemplation and his mind has told him that he was not at fault. But he was misled, misrepresented by his advisor(s). At this point, you may notice that other stakeholders will also be in the meeting or in the loop.
Not only has he lost his money but also a face to perhaps his family members or his employer (if you are dealing with a professional CFO). Your customer will employ all efforts to see negligence in your work and God forbid, of intent.
You may also notice that he will blame the present Government, Central bankers, The Prime minister/President or even God for his bad luck.
Suggested Response: Bring in clarity
His confidence is low. When confidence is low, there is darkness and he can't see ahead clearly. How well you paint a scenario that directly concerns him is the key. He should be the focus of your speech at all times. Don't bring others or yourself in the picture.
It is also imperative that you check your own behaviour at this point. Self-examine whether you were wrong somewhere. Admit the mistakes. I am presuming it is about the diligence that you should have shown rather than your bad intention in the first place. In which case, this post is not for you.
It is important that you highlight how he was successful in his decisions in the past and how well he dealt with such scenarios in the past. It is important to restore his self-esteem. He is not ready to hear your logic at this moment. Don't rationalise the situation. It is falling on deaf ears. Say that you will examine what you could have done better and what lessons can be learnt. Seek another meeting after a few days.
Stage 4- Bargain: How can I reduce pain?
This will most likely be in your next meeting perhaps with your senior. Your client is ready to now bargain with you. His anger has not gone away. He needs to extract a win; A discount on fee, a freebie, an apology or exit penalty waiver. He wants you to feel the same pain. If however you have been empathetic throughout rather than argumentative, you have already put yourself in strong bargaining position.
Suggested Response: Reinforce Market Wisdom
You may start with showing him his life goals, his asset allocation, the risk mitigation you already built in proposing solutions to him.
Point to remember: Quote Buffet or Franklin or Gandhi. It is important that these are not your words. Or say History has taught us. You have lost a bit of credibility. You are not ready to make sweeping statements all over again, pun intended :P
Stage 5- Fear: What if this happens again?
You have almost taken the aggrieved person out of a depressive state of mind, if now he is asking questions around building a strong fortress. He is also ready to hear the silver lining.
Suggested Response: The family office or Investment Policy Statement he avoided all this time
It is also important that you believe yourself in what you say and propose. He needs to see optimism. You should be filled with optimism and hope at this time.
Remember if greed and fear are two extremes, the middle point is HOPE. You have done well to bring him here. You are ready to implement any change in his portfolio at this point. Do not rush and use this opportunity to push some new and untested products. Simplicity is the key.
I would like to add that above are the same emotions that any depressed person feels after he/she has suffered an irreparable loss in life. You are free to observe sad people around you and check their behaviour. Help them out using above skills. The method is the same.
All the best!
Love and Peace,
My focus of today’s post is not on any spiritual plane but the real damage in financial portfolios caused by the market/economic forces. My sincere effort through this writing is to benefit my brethren advising their customers in financial investments. Majority of us have good intentions of helping our customers achieve their financial goals. We are constantly balancing our actions based upon client’s changing needs, greed, fear and market realities. However, when the storm comes, it impacts us all. The degree may vary but the pain is felt by all.
I am sharing with you some practical tips on how to help your clients come out of this pain and manage their psychology. Many investors would want to “Sell” and get out and swear never to come back into market related investments. Those who have seen some cycles of investing will be better equipped to handle this pain. However, in general, some of the stages I am enumerating below are universal in nature. Everyone who is going through some kind of pain or has suffered a loss goes through these emotions. Without further ado, let me dive straight into these.
Stage 1- Disbelief: How could this happen?
This is the first stage where the aggrieved is shocked. He wants to call you many times (I am going to use the term “He” to refer to the aggrieved person, please interpret it as gender indifferent). He will also check with his friends and others to see if they are in the same boat.
Suggested Response: Responsiveness and accurate update of facts
You will contribute to his anger if you delay in responding or if the facts around his portfolio are inaccurate. He needs latest information. Invest some more time.
Stage 2- Denial: This can't happen!
Denial is usually happening alongside disbelief. There is also self cursing for giving in to his Greed and falling into the trap of making more and the temptation of making some quick money. Depending upon the level of his attachment with money, his (or her) upcoming financial goals that were to be met, an overriding sense of uncertainty and not feeling in control, will be his dominant emotions at this stage. To make the matters worse, all newspapers and electronic media will be projecting bad news. All sorts of rumours will be floating in the market to add fuel to the fire.
Suggested Response: Acknowledge the emotions of his customer
Statements like “I understand what you are going through” help you connect. Avoid adding "But" after this sentence as it nullifies all you said before. Instead, use sentence like "with your permission, may I add a perspective or offer an explanation". Give the man some control by seeking permission. Please don't fake it, put yourself in his shoes, feel empathy.
Stage 3- Fixing or shifting blame: Why did this happen?
Also known as 'Psychological Projection', now he is ready to shift the blame onto you. He has done his share of contemplation and his mind has told him that he was not at fault. But he was misled, misrepresented by his advisor(s). At this point, you may notice that other stakeholders will also be in the meeting or in the loop.
Not only has he lost his money but also a face to perhaps his family members or his employer (if you are dealing with a professional CFO). Your customer will employ all efforts to see negligence in your work and God forbid, of intent.
You may also notice that he will blame the present Government, Central bankers, The Prime minister/President or even God for his bad luck.
Suggested Response: Bring in clarity
His confidence is low. When confidence is low, there is darkness and he can't see ahead clearly. How well you paint a scenario that directly concerns him is the key. He should be the focus of your speech at all times. Don't bring others or yourself in the picture.
It is also imperative that you check your own behaviour at this point. Self-examine whether you were wrong somewhere. Admit the mistakes. I am presuming it is about the diligence that you should have shown rather than your bad intention in the first place. In which case, this post is not for you.
It is important that you highlight how he was successful in his decisions in the past and how well he dealt with such scenarios in the past. It is important to restore his self-esteem. He is not ready to hear your logic at this moment. Don't rationalise the situation. It is falling on deaf ears. Say that you will examine what you could have done better and what lessons can be learnt. Seek another meeting after a few days.
Stage 4- Bargain: How can I reduce pain?
This will most likely be in your next meeting perhaps with your senior. Your client is ready to now bargain with you. His anger has not gone away. He needs to extract a win; A discount on fee, a freebie, an apology or exit penalty waiver. He wants you to feel the same pain. If however you have been empathetic throughout rather than argumentative, you have already put yourself in strong bargaining position.
Suggested Response: Reinforce Market Wisdom
You may start with showing him his life goals, his asset allocation, the risk mitigation you already built in proposing solutions to him.
Point to remember: Quote Buffet or Franklin or Gandhi. It is important that these are not your words. Or say History has taught us. You have lost a bit of credibility. You are not ready to make sweeping statements all over again, pun intended :P
Stage 5- Fear: What if this happens again?
You have almost taken the aggrieved person out of a depressive state of mind, if now he is asking questions around building a strong fortress. He is also ready to hear the silver lining.
Suggested Response: The family office or Investment Policy Statement he avoided all this time
It is also important that you believe yourself in what you say and propose. He needs to see optimism. You should be filled with optimism and hope at this time.
Remember if greed and fear are two extremes, the middle point is HOPE. You have done well to bring him here. You are ready to implement any change in his portfolio at this point. Do not rush and use this opportunity to push some new and untested products. Simplicity is the key.
I would like to add that above are the same emotions that any depressed person feels after he/she has suffered an irreparable loss in life. You are free to observe sad people around you and check their behaviour. Help them out using above skills. The method is the same.
All the best!
Love and Peace,
Nitin Patnia
Disclaimer: The author works as a financial advisor in India. The views expressed here completely his own and are a collective wisdom of numurous humans that co-exist or existed before the author. The author claims no right of originality of ideas but would like to assert the right to his style of writing. There is no intent to hurt anyone's sentiments with his opinions. It is just an honest expression by the author to help anyone who may be benefited from his writings. And a medium to express gratitude to all who contributed to benefit the author with wisdom.
