How to Talk to Clients About the SVB Collapse

If you work in the financial services industry, there’s likely been a hot topic of discussion on your plate recently: the Silicon Valley Bank (SVB) collapse.

Everyone wants to know what happened, who’s to blame and how they’ll be affected. Sunday brunch is taken over by economic talk – “Should the government bail out the big bank?”

Followed by: “What does that even mean?”

“Oh, shut it, George.”

That’s my impression of a typical American family talking about the SVB collapse. But it’s true that those outside of the financial sphere have a tough time grasping how this could happen. Aren’t banks the safest place to keep your money? How can this happen? What does this mean for the economy as a whole?

As a financial advisor, you’re likely facing questions from several (if not all) of your clients, and it can be tough to know what to say.

To help you navigate those crucial convos, we’ve outlined three top tips for talking to clients about the SVB collapse.

Explaining the SVB Collapse

Your clients want to know what happened – after all the words “bank collapse” sound pretty dramatic. And if you’re not giving them answers, they’ll turn to TikTok or Facebook or a news site to get to the bottom of it – and you know those sources will just fan the flames of fear, not help calm them down.

The problem there is that you have no idea what information they’re finding. Anyone can post anything on social media or even reputable-looking news websites. Unfortunately, many people try to capitalize on the drama of disastrous events like these to gain more views or online traction – leaving panicked investors in their wake.

To avoid Google-happy clients and get ahead of the rumor mill, be sure to have your elevator pitch of the SVB collapse ready to go.

As you explain the SVB situation, remember that your clients don’t have the financial background that you do; stick to simple terms and straightforward answers whenever possible to avoid confusion.

3 Communication Tips for Calming Client Fears Amid the SVB Collapse

When client anxiety is high, communication is more important than ever. Use these three tips to help your clients navigate through these uncertain times.

1. Be the first to reach out

Although it may be tough to know exactly what to say about the SVB situation, perhaps the worst thing to say would be nothing at all.

Eighty-five percent of clients report that advisor communication impacts whether they stay with an advisor (and refer others to him/her) – and that’s in the best of times. Yet that same research reveals 50% of clients didn’t hear from their advisor at all during the first three months of the pandemic.

If you’re not reaching out, your clients will look for information and advice elsewhere – potentially leading them to another advisor altogether. Even if the SVB collapse doesn’t directly affect your clients, it’s easy to read flashy headlines and panic. Then they hear from their pals that other advisors have already reached out, and feel like maybe their advisor isn’t a great fit after all.

A proactive approach shows your clients that you are thinking about them, actively assessing the situation and watching out for their best interests. You may feel that no action is required, but doing nothing inadvertently sends the message that they’re being ignored.

Consider sending an email to your clients featuring the following:

1. Open with a sentence or two explaining your take on the situation

2. Include a brief explainer of the situation – stick to the facts

3. Let them know you’re monitoring the situation closely and will let them know if any action is needed

2. Bring the facts

Sometimes, our gut reaction to quell anxiety is to tell others to “stay calm” – but that’s much easier said than done.

It’s easy to let the anxiety take over and jump into action when disaster strikes, but for clients with long-term financial goals, an impulsive decision can be a major setback.

To help your clients keep their cool, bring them the cold, hard facts. Bank failures are scary, but they’re not super uncommon. In fact, there have been over 500 bank failures since 2009.

Remind them that SVB is an FDIC-insured bank, which means deposits up to $250,000 are automatically replaced by the government. For those affected by the SVB collapse and covered by the insurance, they already have access to their funds. As the FDIC sells SVB assets, the uninsured amounts will be recuperated to their best ability.

For individuals and companies that had millions of dollars deposited into SVB, it looks like the sale of an SVB subsidiary to Europe’s biggest bank, HSBC, will cover $8.1 billion in missing deposited funds, likely to be available by March 20, 2023.

Remind your clients that there are checks and balances in place to help prevent bank collapses, as well as to recover from them. The SVB collapse is concerning, but it isn’t completely uncharted territory.

In addition, point out how exposed they are in their portfolio to banks in general and any ramifications of these events. Maybe it’s not something they need to be concerned about at all.

And you can always look back at similar events from the past to show how everything shook out in the end. Compare data from the 2008 recession and other big bank failures to help them get a big picture view.

3. Point to trustworthy sources

Remember the digital sharks vying for your clients’ attention? Those guys never really go away.

And you may have time to talk on the phone for 30 minutes, but you can’t do that with every client – and you certainly can’t spend hours and hours with each client discussing the intricacies of SVB’s collapse. In addition to sending your own communications about the situation, you can help clients avoid the clickbait and find helpful information by sharing a few sources you trust.

Where do you look for your news? Although the jargon may be a bit technical for clients, it’s still preferable to anxiety-inducing clickbait.

The SVB collapse has everyone on their toes. As an advisor you can (and should) use your knowledge of the industry to help your clients feel confident in their own finances. With these three tips, you’re off to a great start and communicating like a pro.

Keep Your Lines of Communication Open with Three Crowns

We can help you navigate those tough conversations through our full-service marketing packages. From writing client emails to developing thought leadership, we’ve got you covered. Click here to learn more and connect with a member of Three Crowns today.