Key Takeaways
- A call that turns defensive right away starts on the wrong foot; listening does more work than defending the model.
- The gap between what a client expected and what happened drives panic more than the news itself does.
- Clients remember extremes far more than an average day, which puts the panic call itself among the moments they’ll remember about the relationship.
- Don’t promise perfection—the goal is having a plan for the uncertainty, not eliminating it.
On The Exceptional Advisor podcast, Christopher Geczy, Academic Director of the Wharton Wealth Management Initiative at The Wharton School, said handling a panic call comes down to three things: staying out of a defensive posture, recognizing what’s actually driving the fear, and being upfront that the plan won’t always be perfect.
What Should an Advisor Do First on a Panic Call?
Geczy points to a specific failure mode. “If people call up and the conversation immediately becomes defensive, you’re on the wrong foot,” he said. His alternative is to avoid a defensive posture on the call and let the client talk. Listening, he said, “is a part of emotional intelligence.” Letting a client talk helps them work through fear or FOMO in the moment.
What’s Actually Driving the Panic?
For Geczy, the cause is expectations. “Expectations are at the core of all the elation and disappointment you have in your life,” he said. A client reacting to a downturn is really reacting to the gap between what they expected and what happened. What sticks afterward matters too. “Clients remember those [days] more than they remember just the average day,” Geczy said. The panic call is one of those extreme moments that clients will remember about the relationship.
Why Shouldn’t Advisors Promise Perfection?
Geczy is direct on this point. “You’ve got to have a plan for being suboptimal, because it’s nearly impossible to be perfect,” he said. He also reframes what clients actually expect. “Clients want us to have opinions. They don’t necessarily want us to have answers. We don’t have answers for everything.” That’s built into the tools advisors use, too. “That’s why they’re called models. If they were called the truth, they wouldn’t be called models.” For Geczy, the job is to manage the uncertainty, not eliminate it. “You don’t have all the answers, but you have a plan.”
We go deeper on these themes with Geczy on The Exceptional Advisor podcast, “Where Asset Allocation Meets Client Psychology.” That conversation covers why asset allocation still drives most of a portfolio’s risk, why the rebalancing plan has to exist before volatility hits, and how an advisor with three or four hundred clients decides who to call first when markets turn.
