Marriage, pregnancy, divorce, redundancy, retirement and inheritance. These are some of the key milestones and catalysts in a person’s life when they probably need professional advice.

Yet few, if any, advice businesses have the data, technology and skills to identify and reach potential and existing clients at these critical times.

In other sectors like retail, real estate and tourism, companies are using customer relationship management (CRM) systems, social listening tools and other mar-tech to capture customer data and insights, such as the posts they like, videos they watch and their internet searches, in order to send timely and targeted emails, Facebook posts and Instagram ads.

For example, type the word pram or stroller into any search engine and you’ll immediately be bombarded with ads for prams and baby items.

Similarly, Google the question: my partner just died, what should I do, and you’ll get articles on grief and ads from funeral homes.

In both cases, content from financial advisers should ideally hit a person’s inbox and social media too.

Increasingly, advertising is being seen as a service, not spam. It is useful because it has been curated, based on a customer’s personal tastes and interests.

While most advice businesses are not digital marketing experts (yet), there are still old school techniques for reaching clients during peak periods.

Micro and macro

A life-changing event that affects a person’s behaviour and financial decision-making can occur at any time.

There are broadly two types of life-changing events: Macro and micro.

Micro events, like those listed in the opening sentence of this article, affect individuals or family groups. Others include the death of a loved one, a health crisis and the impact of a bad investment.

Macro events affect large numbers of people and are much easier to identify because they usually dominate the media headlines for months. This coverage keeps the issue front of mind, creating uncertainty for consumers and opportunities for advisers.

Macro events include a financial crisis, recession, large scale natural disasters and war.

Financial advisers looking for a timely reason to connect with existing and potential clients need only read the paper.

By mid-2024, economists are predicting a global economic recession, as central banks simultaneously hike interest rates in a bid to tame inflation.

Domestically, rising interest rates, rising living costs and the return of inflation to levels not seen for a generation are putting businesses and households under enormous pressure.

It is estimated that this year around 880,000 Australian households will move from a low interest, fixed rate loan to a higher interest variable loan. For many this will occur in September and October.

This so called mortgage cliff is one of the biggest challenges facing Australian families, who must find hundreds, if not thousands, of dollars more for loan repayments each month.

Advisers don’t need a fancy CRM to know that many Australians are hurting and need help right now. This increases the likelihood of them reading an email or taking a call from a financial adviser.

Bias, attitudes and emotions

During a major event or crisis, a person’s decisions will be influenced by their biases, attitudes and emotions.

The field of behavioural science aims to understand these influences and their impact on the behaviour of individuals during macro events.

Advisers can leverage behavioural science to anticipate the reaction of their clients, identify possible risks and solutions, and be ready to present them to clients.

As a starting point, they should consider questions like:

  • How do people behave when faced with a financial crisis and how might this impact their goals?
  • Is there a different response to a macro and micro event?
  • What are the most common biases and heuristics (behavioural short-cuts) exhibited by clients during a financial crisis?

As rational as human beings strive to be, when the stakes are high, emotions can override reason and influence a person’s actions. Fear and anxiety, in particular, can lead to hasty decisions that may exacerbate the impact of an event.

Similarly, the feeling of regret can also be a powerful motivator. Regret aversion can cause individuals to avoid decisive action for fear of making a decision they will later regret. This paralysis can prevent timely responses necessary during a financial crisis.

The realisation that behavioural biases can adversely impact a person’s financial decision making, especially during a macro event, highlights the importance of developing strategies to counteract these influences.

Advisers can help people prepare for and mitigate the impact of cognitive biases and emotions in finance.

By doing so, they can demonstrate their experience and ability to stay calm, despite the circumstances. They can also provide much-needed confidence and assurance.

With further economic uncertainty on the horizon and investment experts predicting possible global recession in the next 12 months, advisers should be actively reaching out to potential and existing clients to help them understand their financial position, manage their financial affairs and make smart decisions.

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