Managing Your Practice in an Extremely Volatile Bear Market

Rob Knapp addresses the current economic conditions and how FAs can handle their practice during a bear market. 

Here is a synopsis of the content: 

The Coronavirus has created many unknowns that the markets have never experienced before. And as you know the markets don’t like uncertainty. This unexpected “black swan” resulted in extreme volatility and a bear market. This creates a tremendous opportunity for us, as financial professionals.  Our leadership skills and ability to be there for each other and our clients is greatly needed right now.

How do you stay positive in this kind of situation? You need to know your facts. What makes us so upset in situations like this is the lack of control. By doing research on other pandemics you will feel like you have more control by knowing the facts that are out there. Learn your facts on where we are going and how we are going to get there. Your clients are looking for you to have an opinion. You can express your thoughts on the topic but always remember to be six moves ahead. That way you can adjust your thinking as the facts change.

There have been some promising breakthroughs which is good news. For example, Abbot Labs has created a relatively quick test to see if you are infected. That will be a game changer. The Italians have found treating patients with a combination of the chloroquine and a z-pack shown some effect. Solutions are being developed every day that we need to stay current with. I am hoping we will remain in lockdown until the appropriate time. That’s up to the government and the American people.  I myself am prepared for a year lockdown.

I am thinking we may have to watch this virus for a year or more. For example, in my research I found that the Spanish Flu Pandemic of 1918 started in March 1918. It hit again in November of that year and a third time the following February. All they did to survive was the same thing we are doing now – separate people. I think there is real hope that the young and healthy can get back to work by the end of the year but that is evolving daily.

One of the things I would encourage you to do is be a servant leader. A servant leader, differing from a managing leader, puts their clients and others first. Being a servant leader, a strong leader, is challenging when you want to run home and hide. But you have to be mentally tough and these are times to learn how to do that - during a crisis. Who do we look to when we think of people that manage themselves well in a crisis. We think of those people, fireman, police, soldiers, who run towards a problem. What is the first thing they learn to do? Stay calm in a crisis. Every time you experience something that makes you angry or scared the first thing you should do is to stay calm. What happens when we don’t stay strong or panic?  The blood flows from our head down to our extremities and we have the fight/flight reaction. You can’t think.

Why do some people survive disasters and other don’t?

Whether it is a plane crash, war or an epidemic they can come up with a plan, and then adjust it as necessary. In the famous ferry crash people were just stuck sitting there frozen while other went around them and jumped into the water and survived. The same thing has been reported about airplane crashes. Some people will be paralyzed and not move while others will act to save lives.  The next time you are in an uncomfortable situation rather than react, think, ‘this looks interesting and it might be uncomfortable but it could make a good story.’ That’s the first step to regaining your control.

How do you become mentally tough?

In order to create that state to get you out of the situation you have to be mentally tough and create an ideal performance state. An ideal performance state is a result of having an ideal recovery state. Athletes know that performance can only happen if they have recovery time. That includes the proper amount of sleep, exercise and diet and feeding your brain good nutrition in terms of positive reinforcement.  Make sure you surround yourself with positive people, positive media and reinforce the positive things that make you feel good.  You need eight hours of sleep, 30 – 60 minutes of exercise a day.  Be careful of your diet during these stressful times. People react to stress by eating too much or have an extra cocktail or two. Those indulgences aren’t particularly good for you and don’t help you prepare for the stress. Plan your day by eating small healthy meals and lots of water.  Take a break every 15 minutes during the day and stretch, walk.

Demonstrate your emotional intelligence.

Emotional intelligence is comprised of self-awareness, self-regulation, motivation, empathy and social skills. After looking at all the facts you can gather yourself and reach out to your clients, Centers of Influence and others that might need your help. By asking empathetic questions and listening, you can put yourself in their shoes and know what they are feeling. Your average client is 65 years old. It has been that way as long as I can remember. In 2050 the average client will be 65 years old. Why?  Because clients come to us when they need our help. That is where we should be prospecting. You have to intellectually feel what it is like to be going through this as a 65-year-old. You put yourself in their shoes. What are they thinking about now? What do they want to know?  Ask them about their preexisting medical conditions and how prepared are they for the lengthy social distancing.

In Supernova we use a concept coined, Enthusiastically Endorsed Model. Supernova FAs have every client create a list of their trusted advisors that they would recommend to another. These professional advisors are the closest to your clients and most important to them. This list can be amazingly valuable to you in order to really understand the client. Literally know who their doctors are. What is the status of that relationship now? How are they affected?

In 1987 during the market crash, as the manager of a large district, I was working with FAs, the administration of the firm and clients all at the same time. It was stressful but I knew how to be present and calm due to my years as a pilot.  During all of the chaos one of the other managers just left the office and went home! He was so upset he went home! If you were the commanding officer of an aircraft carrier do you think you would get in a little boat and go home in the middle of a crises?  Of course not. That’s what some of these other advisors might do – just disappear and you can be there to help their clients. Volatile markets are a part of what we do, it’s what we signed up for and we need to be there helping the clients. What happens to an 80-year-old couple when both of them get sick with the virus and can’t go to the hospital because there are no beds? Have you asked your clients what their plan will be? You can help them think about that.

I advise you to articulate a vision for the future You are an optimist to be in this business. You have to have a vision for the future and make it a part of what your client is trying to accomplish. How does your vision fit in with their life and their plan? Review their plan. They watch the news and could leap to the conclusion that the coronavirus is killing people…. the coronavirus is causing the stock market to crash….. when the stock market crashes I am going to lose all my money….. when I lose all my money I am going to starve …. and if I starve I die.

Do a cash flow analysis for them based on the cash flow analysis they will see they can survive. Part of the plan is to rebalance their portfolio. When, where, why and how and how do you do it when the stock market is roaring or crashing?  With every client you establish the rationale of the why and when. And consistently do the rebalancing. If a client is resistant due to fear or misguided advice you can usually do dollar cost averaging for them. Reinvest dividends, reinvest income from municipal bonds, REITS, etc. That’s what saves the client a lot of money. Eliminate margins. Make sure they aren’t overspending their money. The cash flow analysis will help with that. Finally consider converting to IRA to a Roth IRA for them.


Most FAs aren’t calling their clients. Some clients, like the example in this recording will panic and sell all their stock if they don’t communicate with their clients. that’s why you call prospects because they may not be getting the advice from their own FAs.  What would I be doing in this market? Calling my COIs that we have been talking to them every month. Very important to talk to them about what you are doing for your clients. Call your enthusiastically endorsed professionals and tell them how the clients are happy with what you are doing and ask them if they have anyone else who might need your help. Meet with your mastermind group. Now is the time they need you the most. Explain your plan. Ask your clients if they are ok, friends and family ok and is there anyone else who might need a second opinion or your help and advice.

I think this will be a shorter bear market than most. Oil prices and inflation are low. And once the virus is over we will get back to life as usual but it will be different. There will be new tools and new business that will start as the world is changing. You want to be in the cutting edge of those things.

Please reach out to me by contacting Cindy ( if you would like to set up an appointment.


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