FA Center: If you’re anxious about markets and investing, make sure your financial adviser gets it
We hire financial advisers to tackle money matters that we’re unable or unwilling to manage ourselves. But they cannot wash away all the stress that comes with saving, spending and investing.
The best advisers are experts at detecting client anxiety and addressing it. They’re attuned to a client’s concerns, fears and moods. They’re observant and empathetic. They also anticipate triggers that might cause a client’s anxiety to spike. When that occurs, they take steps to tamp down stress before it flares up.
Yet many advisers struggle to recognize financial anxiety in their clients. A recent survey found that 71% of clients say they experience financial anxiety, but only 49% of advisers thought financial anxiety affected their clients.
The results indicate that advisers may not necessarily appreciate clients’ money worries. If a client has sufficient funds to cover emergencies — and then some — the adviser may figure there’s no basis for anxiety.
“Financial anxiety is normal and healthy,” said Leibel Sternbach, an adviser in Melville,, N.Y. “It’s nature’s way of telling us something is wrong and that our life as we know it is at risk,” even if there’s nothing ostensibly wrong and we’re inflating the risk.
To bridge the gap between client anxiety and advisers’ inability to detect it, financial planners need to look inside themselves. If they’re aware of their own sources of financial anxiety, they can better relate to others who grapple with similar feelings.
“Advisers have to look in the mirror and ask, ‘What is it we’re experiencing right now?’” said Sternbach, author of “Living With Financial Anxiety.”
Confronting your own fear or uncertainty helps you empathize with clients. You’ll come across as more attuned to their feelings and better able to listen with genuine concern.
Specific triggers can vary, Steinbach says. As an adviser, you might fear a prolonged market collapse and its aftereffects. Clients, by contrast, might fear inflation upending their budget or planned retirement date.
“You have to understand their primal fears and feelings,” Sternbach said. “Once you hit on that nerve, you’ll see a shift from an intellectual conversation about numbers to an emotional conversation about how it feels to them.”
As clients open up about their feelings and anxieties, Sternbach asks them: “What would it take to make you feel safe?” He suggests that they write down their answer — as well as what causes them to feel unsafe. From there, he works with them to identify “anchors in their life that they can hold onto to remind them that everything will be OK.” Examples can include setting aside a sufficiently large emergency cash fund or retaining the freedom to travel or even buy a new home if they want.
Advisers who are oblivious to a client’s anxiety may rattle on about the markets or their investment philosophy. In all likelihood, this will only worsen the client’s fretfulness.
Attentive advisers take a different tack. They’re keen listeners and observers. “On the surface, what the client is saying may not be exactly what they are feeling,” said Ryan Ortega, a Los Angeles-based adviser. “When we’re talking, I’m watching their body language. It’s noticing their hesitation and pauses when we’re talking through certain things.”
Ortega recalls a client meeting in which the conversation seemed to flow smoothly on the surface. While the client nodded and signaled agreement with Ortega’s points, there were subtle red flags.
“I saw some nonverbal cues — this was over Zoom — that made me think the client wasn’t fully buying into what I was saying,” Ortega recalled. “There was this blank look in their eyes. Maybe they were embarrassed at certain points.”
While the client insisted they understood and consented to Ortega’s recommendations, the adviser had his doubts. Those doubts were confirmed a few hours later, when the client emailed Ortega. “I’m not sure I’m comfortable with what we talked about,” the client wrote.
Ortega set up another meeting to dig deeper and uncover the client’s concerns. It turns out there was anxiety about assumptions that fed into financial projections that Ortega was making.
Advisers’ communication skills are further tested by their ability to pose open-ended questions and listen patiently to the responses. Clients may take a few seconds to compose their thoughts. It’s important to keep quiet while they ponder how to reply.
Anxiety is sometimes irrational. But labeling it as such can rupture the relationship. Rather than negate feelings, validate them. Use phrases such as, “Many clients feel that way” or “In this environment, I can understand where you’re coming from.” People will be more receptive to your ideas if you dignify their anxiety. You want them to feel supported, not threatened, by your expertise.
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