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5 Tips For Creating a Market Meltdown Communications Plan
With some advance preparation, your communications can light the way when investors are searching for answers and reassurance.
Congress' game of debt-ceiling chicken, a feeble economic recovery, and the ongoing debt drama in Europe have spurred huge spikes in market volatility. In the month of August alone, the Dow Jones Industrial Average swung by 2.0% or more on all but six of the month's 23 trading days. With September and October being two of the cruelest months for investors, don't be surprised if we see more wild gyrations in the weeks ahead.
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When the market is careening up and down like a runaway rollercoaster, investors need perspective, guidance, and a bit of reassurance. During such times, silence most definitely is not golden. Whether it's an email, a phone call, letter, blog post, podcast, or even a tweet, investors want to know that someone is minding the store.
The challenge, of course, is that when the markets are in crisis mode, it can be difficult to carve out the time to keep your constituents updated on the latest developments. That's why it pays to create a "market meltdown communications plan" in advance. The next time "the stuff" hits the fan, you'll be ready. With that said, here are five factors to consider as you develop your plan.
1. Define "Crisis."
One person's crisis can be another person's buying opportunity. Therefore, before you sound the alarms, define what constitutes a crisis for your organization. If you define a crisis as a daily move of 2% or more in the stock market, you might be overwhelming (and unnerving) your target audience with too much information. However, if the market declines 2% for five straight days, your clients will likely be in need of some handholding. Consider forming a crisis communications team to define what will trigger your firm's plan and to execute that plan when conditions warrant.
2. Hone Your Message
Let's pretend that a week from today, the Dow is down 750 points by 10 a.m. over concerns about European debt (it's not too farfetched). Your crisis communications team agrees it's time to get a message out. But what do you say?
While each crisis will have unique characteristics, most market meltdowns share certain similarities. Therefore, you can draft the "guts" of your messages in advance. Key messages might include some historical perspective to remind your readers that the most recent crisis is neither the first, nor the last, to test the market. Show how past crises have turned out to be minor blips in the market's long-term upward trend. You might even include a chart or two to demonstrate this concept.
If you're a financial advisor or asset manager, reiterate your core investment principles and remind clients that reacting emotionally to market volatility is usually a bad decision. Retirement plan sponsors may want to remind participants that their retirement goals may be years or even decades in the future.
It's also important to recognize the seriousness of the current situation. Let your audience know that it's natural to be concerned when the financial world appears to be coming apart. Avoid clichés, add your own unique perspective, and let people know they can call if they want to discuss their situation. Finally, if you have come across articles, videos, or other information from sources you trust and respect, provide links to that content.
3. Choose Your Communications Vehicle(s)
During a market crisis, you will need to communicate with as many people as possible, as quickly as possible. In a pinch, nothing beats the efficiency of an email blast (or a series of email blasts). Draft the outline of your emails in advance and get preliminary compliance approval. When the next crisis hits, rather than starting with a blank page, you may only need to fill in a few details about the crisis du jour.
Once you've sent an email, consider supplementing it with blog posts, tweets, or phone calls. You might even post a video or a podcast on your website. If the crisis is protracted, consider scheduling a conference call or mailing a letter. The challenge is to reassure your clients, shareholders, or participants that you are on top of the situation, while not overdoing it and causing them to panic. For a great example of how one financial advisory form recently communicated with its clients, see 5T Wealth Management's recent client emails.
4. Refine Your Messages for Specific Target Audiences
If you want to turn your communications up another notch, consider tailoring your messages to specific audience profiles. For example, a financial advisor could segment his email list among retirees, pre-retirees, and those who are still in the accumulation phase of retirement saving. If you manage several different model portfolios, you could segment your audience that way.
While portions of your message might be identical, segmenting allows you to address the specific concerns of each group. For example, if your retirees have only small allocations to stocks, you can remind them of that convenient fact. For younger clients, remind them that they have decades to go before they reach retirement age and that the market drop may present a good buying opportunity. If you use an email program such as Constant Contact, it's easy to segment your clients by creating targeted mailing lists.
5. Don't Overdo It.
When the ride gets rocky, you need to be ready to spring into action and provide your perspective quickly. If you are wrestling with the compliance department while the market is melting down, your messages may arrive too late to do any good. In fact, a message that arrives after the dust has settled may do more harm than good. That said, be careful not to overreact to every blip that hits the markets. If you communicate too frequently, clients, shareholders, and participants may get anxious and decide that investing in the stock market is just too stressful!
The information above just scratches the surface of what's needed for a well-rounded crisis communications plan. As the recent hurricane and tropical storm in the Northeast demonstrated (not to mention a weak, yet still unsettling earthquake), you also need a contingency plan for communicating during natural or man-made disasters.
In the meantime, now is the time to dust off your "market meltdown communications plan," or to get started on creating a plan for the first time. Of course, if you need help drafting emails and honing your message, Bull's-eye Financial Communications is here to help.
Feel to give me a call at 774-719-2324 or email me at neil@bullseyecommunications.net.
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