The stock market recently dropped more than 1,000 points in one day. The decline made headlines on social media, print, cable news, and everywhere else. The implied message appeared to be fear. Fear the market. Fear your retirement portfolio. Fear for your lost dreams.

Market turbulence calls for clear communication from investment managers. Your expertise helps investors when markets are volatile. How you share that expertise affects your investor relationships. Let’s explore the reasons for proactive communication during market volatility and effective ways to do it.

The Danger of Silence

Recent conversations with investment managers revealed concerns about market volatility communication. One manager stated, “A thousand-point dip isn’t that bad. I’ve seen worse.” This view dangerously disconnects professional experience from investor perception.

Another manager said, “We don’t discuss why markets go up and down. We do not invest based on today’s news. We invest based on a long-term disciplined strategy. So why react to short-term market drops?” This stance misses the core purpose of investor communication. While you may not predict market movements, or invest on daily news, investors rely on you to explain how these movements may affect their investments.

Silence during volatility is a missed opportunity to add value. It also risks damaging your relationships with your investors.

The Hidden Costs of Poor Communication

Inadequate communication during market volatility has significant hidden costs. When guidance is absent, investor anxiety rises, often leading to rash decisions based on unreliable sources.

Your silence creates a vacuum that competitors eagerly fill. They’re not just reassuring their investors—they’re targeting yours.

Most critically, quietness during turbulent times may lead investors to view you as unaware or unconcerned. This erodes hard-earned trust. Such erosion can be challenging to reverse and may result in investor attrition.

The Power of Proactive Communication

Effective communication during volatility can give you and your firm substantial benefits by:

• Building trust and credibility
• Proving your value extends beyond portfolio management
• Mitigating emotional decision-making
• Enhancing investor retention
• Providing reassurance when investors need it most
• Helping investors adhere to long-term investment plans
• Generating referrals

Overcoming Common Objections

Some investment managers argue, “Nobody’s really concerned. We only received a couple of investor phone calls.” This assumption is dangerous. For every investor who calls, many more worry silently. Don’t wait for a flood of panicked calls—it’s too late by then. Proactive communication prevents minor concerns from ballooning into major problems.

Others say, “We don’t want to draw attention to negative market conditions.” The solution is to frame your communication as proactive risk management and education. Focus on a long-term perspective and your firm’s preparedness.

For those claiming, “We’re not market commentators,” the answer lies in explaining your investment process and risk management strategies. Investors don’t expect market forecasts. They want to know how you’re navigating market conditions on their behalf.

Developing and Delivering Your Message

Effective communication during market volatility begins with carefully developed messages. To calm nerves and prevent panic:

• Place current events within the context of historical patterns
• Explain your risk management approach clearly
• Emphasize the importance of sticking to long-term strategies
• Highlight how volatility can present opportunities for patient investors
• Avoid jargon that might confuse investors

Tailor your communication strategy to different investor types. Financial advisors, institutional investors, and financial advisors require varying levels of detail and frequency in communications. Address current market conditions promptly, always connecting them to your long-term strategy.

Elements of your communication strategy should include:

• Showing conviction in your investment strategy
• Focusing on education about market dynamics
• Encouraging two-way communication with investors
• Providing clear, actionable guidance without making unrealistic promises

You want to be a calm, steady voice amid market noise. Balance transparency about risks while highlighting potential opportunities.

Using Technology for Effective Communication

Technology plays an important role in investor communications. Diversify your digital channels to reach all investor segments.

Use various digital tools to enhance your communication:

• Short commentaries or videos on your website to explain complex market conditions
• Live Q&A sessions or webinars for real-time interaction
• Regular email updates with concise market insights
• Social media posts for quick, timely updates

Keep your website and digital presence up to date. They should reflect your current thinking on market conditions. Use data analytics to understand which communications are most effective. Pay attention to engagement metrics to continually refine your strategy.

Here’s a cautionary example: A year after Russia invaded Ukraine, causing significant market volatility, one investment manager’s website showed no mention of these events. Their most recent post, from three months before the invasion, simply announced they had won an award for “best advisor.” This outdated content made the manager look out of touch with current market conditions and their investors.

Communication as Your Competitive Edge

Your thoughtful, timely communication stands as a powerful differentiator with investors. It transforms market volatility from a challenge into an opportunity to share your insight and perspective.

Your guidance helps build investor trust during volatile times. Clear, consistent communication cements your role as an indispensable advisor and partner.

By mastering strategic communication, you’ll confidently navigate volatility and emerge as a trusted leader. In investment management, superior communication often distinguishes the exceptional from the average. Make it your competitive edge.

Ready to Master Market Volatility Communication?

Effective communication during market turbulence can be your competitive edge. If you’re ready to enhance your firm’s communication strategy, build stronger investor relationships, and stand out in a volatile market, schedule a free strategy session with us today.

Dan Sondhelm is the CEO of Sondhelm Partners, a firm dedicated to helping boutique asset managers grow their businesses, strengthen institutional credibility, and build influential brands.