Fears of COVID-19, roller-coaster equity markets and bond markets at historic lows are activating investors’ (and professional investment managers’) fight-or-flight instincts. These feelings can lead to highly irrational behaviors. Here are some techniques for speaking to clients during these volatile times.

Should I Sell Everything Now?

Headlines scream: “Stocks plunge as coronavirus declared a pandemic.” Articles warn: “Stocks plummeted Wednesday in another volatile session....rapid spread of the coronaviru...uncertainty around a fiscal response to curb slower economic growth...”

Your phone is ringing constantly; your email inbox has hundreds of new messages; your phone is red-hot from all the texts. What do you do?

When markets become volatile and clients experience unexpected setbacks, even the most rational investor can become emotional and inclined to make irrational, impulsive decisions. This is when prudent financial advisors realize that managing client emotions is more important than managing money.

Blame the Brain

The culprit is a fundamental part of our anatomy: the brain. When the human brain perceives a threat or danger, the brain stem—the primitive, impulsive section—pumps adrenaline and endorphins into the body, preparing it for action. This fight-or-flight mechanism can overwhelm even the most rational investor’s ability to think clearly, recognize opportunities and strategize about the future. This often results in clients making irrational and reckless decisions.

Even experienced investors struggle with the fear and anxiety that markets can trigger. But great financial advisors don’t allow clients to succumb to the impulsive part of the brain. These advisors manage the emotional responses and knee-jerk behaviors of distressed or fearful clients to return them to a more rational and thoughtful state of mind.

Here are some simple steps to help investors engage their neo-cortex, the thinking, rational side of the brain.

Steps for Achieving Rationality

When a client is anxious, the action-oriented part of the brain creates the physical agitation you can see or hear. While it’s tempting to address fears and concerns with information and reassurance, at the beginning of a conversation, that approach is useless because the primitive brain doesn’t have access to language. Talk is futile when the primitive brain is in charge of behavior.

Use this four-step process to stimulate the client’s neo-cortex and reduce activity in the primitive brain.

Step One: Listen Actively and Engage Language Skills

Encourage the client to use language.

  • Get the client to speak for several minutes. This activates the rational part of the brain and inhibits the impulsive part.
  • Ask the client, “How are you feeling about things?” When he responds, guide him with “Say more.”
  • Listen attentively and ask for more information.
  • Don’t address issues or concerns; your rational ideas won’t be heard or understood.

Step Two: Initiate Cause-and-Effect Thinking and Planning

Increase the activity in the neo-cortex by asking the client to consider likely outcomes.

  • Get the client to think about the future and to articulate how those frightening events may occur by asking, “What do you think is going to happen? What, specifically, will cause this?”
  • Continue to ask for more information and request specifics.
  • Don’t offer any alternative ideas yet; the client is still too upset to hear you.

Step Three: Encourage Self-Awareness and Rational Thought

Clients don’t fear what has already happened; they fear loss and sadness and become afraid when they make mental images of what might happen in the future.

  • Bring the neo-cortex fully online by asking, “Is that what you think or just how it feels right now?” This forces a client to exercise both strategic and analytical thinking as well as self-awareness about the thinking process itself.
  • The question enables the client to see the difference between thinking and feeling, discover how fears aren’t based on rational thoughts, and shift gears mentally. (Note: This still isn’t time to offer a new perspective.)
  • Step Four: Normalize Concerns and Provide Resources
  • Explain that it’s normal to be worried or fearful. Then offer an idea or information that can be used to approach investing rationally, not emotionally.
  • Normalize the client’s experience by saying, “I understand how you feel; it’s perfectly normal to be as concerned as you have been.” Don’t let the client feel inferior to other investors.
  • Once the rational part of the brain is fully activated, the client can hear and make sense of the ideas and information you offer. Now you can offer alternative, rational cause-and-effect solutions to the problem.

Next Steps

To put this strategy into practice, we recommend two preparatory steps. First, become well informed about your firm’s guidance and perspective on the coronavirus pandemic, and try to understand the science behind the virus. By concentrating on the facts, the data and the analysis, you can equip yourself with a professional point of view and reduce your own anxiety.

Second, learn the four-step protocol explained above and follow the steps exactly. In order for clients to reduce their emotional reactivity and fully access their rational brains, they need time and the chance to put their feelings into words. Be patient, listen carefully, and don’t try to offer ideas until you can feel the client becoming calmer and more thoughtful about what she is saying.


This process is a simple progression from listening carefully (when the client is speaking, the rational part of the brain is being activated) to speaking thoughtfully (once the client is more rational, he can use the information you have to offer). The strategy is easy to remember and is especially helpful in times such as today. Use it whenever a client is upset and acting based on emotions.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

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