Obviously, the current climate on Wall Street is certainly challenging even the most seasoned advisors. As you know, you wear many “hats” in your role as a financial advisor: Besides being a trusted wealth management expert you may be thrust into the role of marital counselor, social worker, clergy person, grief counselor, CPA, tax attorney, trust attorney, and even psychologist.
Challenging times, with negative global events converging simultaneously, give you the opportunity to practice your “psychological skills.” First and foremost, you need to be your own psychologist. You need to manage your own stress in a healthy way, before you can address the stress that your clients are suffering.
The August, 2015 Journal of Occupational and Environmental Medicine reports a study showing that jobs where the employees perceive high job demand and relatively low control over those demands are most at risk for stress and its’ symptoms. Think about your job as a financial professional. You have zero control over the market volatility and the world economy, yet when there are precipitous drops, your job demands increase dramatically, with disgruntled/frightened clients and your own anxiety related to your responsibility to preserve and enhance the financial wealth of your clients.
Fear of the unknown. During these times, you and your clients are vulnerable to the effects of “fear of the unknown.” However, you have the advantage of having studied the history of our markets, even during times of major upheavals, such as wars. The famous (now deceased) motivational speaker, Zig Ziglar, said “F.E.A.R.” should stand for “False Evidence Appearing Real.” He was so right. Most of the things we fear will never occur, yet once we tell ourselves it’s likely to happen, our subconscious mind goes into emergency mode, as if there is 100% probability that what we fear the most will happen.
From your own experience, you can speak to yourself very rationally, recognizing that the current market volatility is temporary and in time the losses will reverse themselves. You would never use irrational self-talk, such as, “Maybe we will never recover from this one and we are heading for another Great Depression.” But, your clients may very well be telling themselves such catastrophic, fear-inducing, statements.
Much research in the field of “Resiliency” shows that events that take place in our lives represent only about 10% of the stress we that we experience. What we say to ourselves about those events represents the other 90% of our stress. Learning to use “linguistically nutritious” self-talk will dramatically reduce our stress. Here’s how you can really help your frightened clients.
Put on your “psychologist hat” for your clients. Be proactive and don’t wait to hear from clients. Send out an email to each one, reminding them how your core investment strategies are solid and how YOU are not worried or frightened about the future, in this regard.
Encourage them to contact you with their concerns and make time to respond to their inquiries. Once they contact you, solicit the fears from them, by asking questions, such as “What worries you the most about the future and your financial security?”
The key is really LISTENING to their fears. People get themselves frightened when they use scary self-talk to describe a situation. When people are frightened, they move into a “deer in the headlights” state of mind where rational counter-arguments may fall on deaf ears. Most advisors are prepared to counter client fears with evidence from past market volatility, etc., but unless you get on the same page with your client, FIRST, they will not focus on your rational counter argument.
So, the first step is empathizing with them, as if you are in their shoes. Before reacting to their comments, paraphrase their fears in your own words to be certain that you understand the essence of what worries them the most. Example: If the client tells you he/she is really worried about what is happening to their portfolio, listen and then respond with:“So because your portfolio has been significantly devalued over the past month, you are concerned that you will now outlive your wealth and you are feeling panicked?”