Protecting Your RIA From a Recession: 4 Smart Business Strategies
As a financial professional, you spend the majority of your time supporting your clients along their unique financial journeys. You’re the guiding force that empowers them to make smart, forward-focused decisions, keep focused during periods of persistent volatility, and stay committed to their long-term plan.
But as a business owner (with only so many hours in the workweek), some of your time and effort should be spent securing your firm’s future stability as well.
When economic uncertainty hits, it’s not just your clients’ well-being to look out for—your firm could also be impacted. A recession is one of the least liked words in our industry, but that doesn’t mean you should avoid thinking about it altogether.
In fact, it’s possible a recession could happen in the coming years (or months), and it’s better to be prepared to face the challenges head-on than to be caught off guard and struggling to stay afloat.
The good news? With the right planning, communication, and strategizing, your firm can better withstand a major economic downturn. In fact, you just might come out the other side stronger. Here are four steps you can take to recession-proof your RIA and reinforce your value to the clients who count on you most.
Step #1: Step Back and Take Stock of Your Firm
Before you can forge ahead to build a protection plan or implement recession-proofing strategies, you first need a clear understanding of where your business stands today. Consider this your proactive call-to-action to perform a business-level stress test. The purpose here is not necessarily to uncover your firm’s weak spots, but to figure out what’s working and where there’s room to improve, especially when you have the luxury of time on your side.
Services
Start with the basics and review your existing suite of services. Do these offerings still align with the needs of your target audience? Review your tech stack as well. Are your current tools helping you engage clients, operate efficiently, and deliver on your promises, or are they creating more work than they solve? If not, are there better, more effective alternatives available? Efficiency in your systems and workflows can help save your firm time and money, both of which will become a hotter commodity once a recession strikes.
People
Take a look at your team. Do you have the right people in the right roles? Are you seeing any operational bottlenecks that could become problematic in a tougher economy? What skills do you want your team to have?
Consider your clients here as well. What does a typical client of your firm look like? While you may have defined what your “ideal client” looks like, that may not necessarily be who makes up your book of business.
Think about how long your average client has been with you. Are your relationships long-term or more transactional in nature? Are you still primarily attracting your target audience? Or have you shifted your focus to a certain niche more organically?
Marketing
Review your existing marketing efforts, and your lead generation strategy in particular. Are new clients primarily finding you through referrals, webinars, online searches, in-person seminars, or something else entirely? The purpose here is to know what’s working well and what may be costing your firm more than it delivers. If a recession hits and your balance sheet is impacted, knowing where to focus your limited resources to drive leads will be critical.
Step #2: Prepare Recession-Focused Communications Ahead of Time
If you feel there’s a period of calm before the storm, use this opportunity to think through a comprehensive communication plan for your team members, network, and clients. Sometimes, an economic downturn moves in swiftly without much warning (think March 2020). Other times, you may see the writing on the wall and give yourself time to prepare. In either case, your clients will be looking for immediate guidance, and your ability to communicate in a timely and consistent manner will set the tone for how they perceive your value.
Just like a coach prepares plays before game day, a strong communication strategy needs to be built in advance. The same notion should apply to your communication strategy during a downturn.
While there’s still time to think ahead, build up some critical client communications. Draft templates for emails, newsletters, blog posts, video scripts, social media updates, and anything else you think will resonate with your clients and target audience.
For example, you might find it helpful to create content now that covers the basics like:
- How to stay calm during market turbulence
- Understanding the economic cycles
- How our firm is preparing behind the scenes
- What you can expect from us
In the event a recession does hit, you can make a few quick adjustments to these premade pieces of content and send them off in a timely manner. This way, you’re one of the first people your clients hear from when they’re feeling anxious over the economy.
Step #3: Focus on Your Most Valuable Clients
While every client deserves your care and attention, you may be forced to go into triage mode when things take a turn for the worse. During a recession, for example, your focus may shift from business development to client retention. That means identifying who your most valuable clients are and putting systems in place to support them.
Once you’ve shared some general communications with clients, prioritize making personal contact with those clients who are most valuable to your firm. This may include your most engaged clients, multi-generational families, ultra-high-net-worth individuals, or long-term relationships that regularly refer new prospects. Define what “most valuable” means to your firm, whether it’s AUM, referral potential, or strategic fit, and make sure your team understands who these clients are and why they matter.
Once the list is defined, build a strategy with your team for how you’ll personalize communications with this group in particular during a downturn. This could be a phone call, an invitation to the office, a video meeting, or even a handwritten note—anything that reinforces the strength of the relationship and shows them you’re paying attention.
These clients are the foundation of your practice. When they feel reassured and supported, they’re far more likely to stick with you, refer others, and even increase their level of trust and engagement when the markets are shaky.
Step #4: Keep Communication Clear and Open
As anxious and nervous as you feel during periods of economic turmoil, assume your clients feel it even worse. Even the most experienced advisors feel the pressure when the going gets tough. But for those who can buckle down, push through the uncertainty, and communicate clearly, opportunity lies ahead.
Transparency, empathy, and proactive outreach become more important than ever during an economic downturn. This is not the time to hide behind email or avoid hard conversations. Show up for your clients, speak clearly, answer their biggest questions, and reinforce your value as their trusted guide and partner.
Don’t wait for clients to reach out: Be proactive. Remind them consistently of your value and show them you’re in their corner. Use tools like Nitrogen’s Check-ins, for example, to gauge client sentiment in real time, then follow up with personalized touchpoints that make your clients feel seen and supported.
Forge Ahead With Nitrogen
No one can predict when, exactly, the next recession will happen, and your clients don’t expect you to have all the answers. But what you can do is think ahead to how your firm will respond and react when uncertainty and volatility do arise.
At Nitrogen, we equip financial professionals with the tools they need to engage clients, set expectations, and weather tough markets with confidence. From behavioral-driven risk assessments to client check-ins, proposal tools, and portfolio analytics, Nitrogen is built to help you support clients, and protect your business, through all economic conditions.
When the next downturn comes, be the steady hand your clients can rely on. Schedule a demo to see how Nitrogen can help your firm stay recession-ready and trusted for the long haul.