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Weathering Economic Downturns: 3 Tips for Recession-Proofing Your Advisory Firm

By Rosa Atkinson

As financial advisors, navigating through uncertain economic times can be challenging. The volatility of bear markets, changing client expectations and the need for digital transformation all pose unique obstacles to growth. During times of recession, it’s easy for firms to focus solely on surviving the present, often neglecting the long-term vision. However, taking a proactive approach and investing in strategies to improve the advisor and client experience can drive growth even in challenging times.

In partnership with Bento Engine and Quik!, we recently brought together a great panel of thought leaders in a thought-provoking webinar, where they shared insights and strategies on how to make your advisory business recession-proof.

Meet the speakers:
Paige Johnson
director, strategic alliances and partnerships
Phillip Hecker
chief executive officer
bento engine
Richard Walker
chief executive officer & co-founder

Missed the webinar? Request the recording here, or check out the summary below for the key takeaways.

1. Understand Market Downturns: Navigating Bear Markets for Advisors

In today’s unpredictable economic landscape, many business owners, especially those in the wealth management industry, are concerned about the possibility of a recession. As a financial advisor, it’s crucial to evaluate whether your business is recession-proof and prepared to weather potential economic downturns. One key aspect to consider is the ability to adapt to changing market conditions and client needs. 

Looking at historical data, bear markets have comprised 36% of the time over the last 92 years, lasting an average of 289 days. On the other hand, bull markets have been on the rise over 70% of the time, with an average duration of 991 days. These statistics emphasize the cyclical nature of markets and the significance of implementing long-term investment strategies. As a financial advisor, understanding and adapting to market cycles can be essential in safeguarding your advisory business against the potential impacts of a recession.

2. Build Meaningful Connections During Tough Markets: Client-Advisor Relationships

When it comes to recession-proofing your advisory business, the relationship you have with your clients plays a vital role. The role of client relationships in recession-proofing your advisory business cannot be overstated, as highlighted by insights from a Cerulli survey of 7,800 households and their financial advisors. The survey revealed that 25% of clients tend to seek advice from multiple financial advisors during tough markets, indicating that some clients proactively look for additional guidance during challenging economic times.

On the other hand, when it comes to advisors’ perception of their relationship with clients, there seems to be a disconnect. While 73% of advisors claimed to be the primary source of financial advice for their clients, only 34% of the clients considered them as their primary advisor. This significant discrepancy suggests that advisors’ perception of their role may not always align with their clients’ perspective, highlighting the importance of effective communication, understanding client needs, and the significance of building and maintaining a meaningful advisor-client relationship based on trust and communication. This can be a key differentiator for advisors, especially during challenging times such as a recession.

To improve the client experience, advisory firms should: 

  • Communicate Regularly: Communication is key during times of uncertainty. Firms should keep clients informed and engaged through regular communication, such as weekly or monthly market updates, webinars, or newsletters. This not only helps to manage expectations but also builds trust and loyalty with clients.
  • Personalize Services: Clients expect personalized services tailored to their individual needs and goals. Firms that use data analytics and technology to gain insights into clients’ preferences and behavior can provide personalized services that meet their unique needs. This approach can improve the client experience and drive growth through referrals and retention.
  • Offer Virtual Services: With remote work and digital interactions becoming more of the norm, firms that offer virtual services, such as video conferencing and online account access, can improve the client experience and maintain business continuity. Virtual services also provide flexibility and convenience, which clients appreciate.
  • Provide Financial Education: Clients often look to their advisors for guidance during market downturns. Firms that offer financial education resources, such as webinars, whitepapers, or seminars, can help clients navigate volatile markets and make informed decisions. This approach can improve the client experience and build trust and loyalty.
  • Measure Client Satisfaction: To improve the client experience, firms should measure client satisfaction through surveys or feedback mechanisms. This helps firms to identify areas for improvement and address clients’ concerns proactively. Firms that prioritize client satisfaction and act on feedback will improve retention by building stronger and stickier client relationships.

3.  Growth Strategies: Thriving in Volatile Markets

In today’s dynamic and volatile markets, growth strategies for financial advisors are essential to thrive and stay ahead of the competition. One effective approach is to leverage integrations with strategic partners, such as Bento and Quik!, two innovative platforms designed to empower advisors.

Bento’s seamless integration is specifically designed to help advisors bridge the advice gap and provide a better client experience. With Bento, advisors have access to a range of powerful features that can enhance their workflow and client interactions. This includes an easy API connection that constantly scans the advisor’s entire book of business to identify advice opportunities, a proprietary content library with purpose-built, compliance-pre-approved materials, proactive alerts, and advice packages that seamlessly integrate into the advisor’s workflow, and compliance pre-approved materials for various age milestones.

By leveraging Bento’s insights, content library, proactive alerts, and compliance features within Practifi, advisors can stay agile, proactive, and well-equipped to navigate market volatility, making informed decisions that can help drive their clients’ success and achieve sustainable growth for their advisory business.

Efficiency is paramount in today’s fast-paced and ever-changing financial markets, and Quik! understands the importance of saving time for financial advisors. With its seamless integration with Practifi, Quik! provides a powerful solution for advisors to streamline their workflow and optimize their operations. Advisors can leverage its form filling capabilities to quickly and accurately input client data, investment details, and other essential information into their Practifi platform.

This eliminates the need for repetitive and error-prone manual data entry, freeing up valuable time for advisors to focus on more critical aspects of their advisory work. This integrated approach streamlines the entire advisory process, allowing advisors to provide a higher level of service to their clients while saving time and effort.

The Saying Goes, “Tough Times Never Last, But Tough People Do.”

The same holds true for advisory and wealth management firms facing economic uncertainties. By staying proactive and forward-thinking, firms can navigate through recessions and emerge stronger on the other side. The recent webinar hosted by Practifi, Bento Engine and Quik! provided valuable guidance on how to recession-proof your business by improving the client experience and investing in people and technology. 

Remember, challenges can be turned into opportunities with the right mindset and strategies. Take inspiration from our webinar and embark on the journey to make your advisory business recession-proof. Furthermore, for insights and practical tips on navigating challenging market conditions, be sure to explore our latest eBook: “Making the Most of Market Volatility”.

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