From the January 2009 issue of Investment Advisor • Subscribe!

First Responder

Advisors are on the front lines of the financial crisis with their clients and colleagues. Olivia Mellan explains how you can stay calm and centered to their benefit, and to yours

The veteran advisor from New York was clearly distraught. It was also clear that he wasn't often distraught when it came to matters financial. He had been running his practice with great success for some time, in fact his father had been in the business as well before he handed over his portfolio to his son to manage. Yet he was at wit's end. "I don't know what to do anymore," he confided to me in early December. He had stayed the course on the investing strategies that had provided his clients with better-than-market returns throughout his career, rebalancing when appropriate. But he reached the nadir, he told me, when even his father threw in the towel and told him he wanted to go to all cash.

This advisor's torment was not an isolated incident. I've heard from a number of advisors during the fall of 2008 who were questioning some of the basic tenets of what they had learned about asset allocation and diversification, about index investing and stock selection. Moreover, they felt the sting in their pocketbooks and were stressed by the demands of employees who feared for their jobs. Of course, they also saw the value of their own portfolios diminish.

You are hurting--reeling from the unprecedented calamities that have hit Wall Street and the recession that seems to claim a new corporate victim daily. You need professional help, and who better to give it than Olivia Mellan, Investment Advisor's resident psychotherapist who not only understands the emotional dynamics of the human psyche, but the unique demands placed on advisors. She spoke at length to me in mid-December.

It seems that advisors are scared--they're questioning almost everything they thought was true when it came to investing.

Yes, they're shook up. I went to a NAPFA regional meeting lately and sat down with an advisor I know who said, "I realize that I'm in mourning; that I'm going through the stages of mourning--anger, denial, acceptance." That's a good way to understand what is happening. Many advisors are going through these stages of grief. They feel like they've been hit by a Mack truck, just like everyone else. They don't know what the rules are anymore, some of them don't know what to recommend. Bargaining--you know, if the market goes up soon, I'll become more religious!

I've been writing about how advisors should be therapeutic educators--and I think a lot of them are, but they've taken this to heart. They think they're responsible, like they should have known. They feel like they're letting other people down. Advisors have been feeling very, very responsible, and beating themselves up about it. There's plenty of self-flagellation going on.

So what should advisors do? Should they talk to their own staff about how they're feeling?

Yes, but it's crucial that advisors work on stabilizing themselves, on centering themselves, that they don't act out their own anxiety when they share how they're feeling with clients or staff. I've heard of advisors cutting their salaries, sometimes below even what they're paying their employees. I think people should know that, people they work with. Advisors should tell their staff, "You're not going to lose your job." That's the kind of disclosure that's good: You want people to know you're in the same boat as them, that you think it's appropriate to take the major responsibility for this. That will only make them more loyal to you and work harder.

What about brain biology? What's going on there?

When you're in a stress mode, all this cortisol gets produced, the adrenal glands start pumping, so you can act on the crisis. But when it's chronic, ongoing stress, your body does not return to normal as quickly as it should. That starts eating into your immune function, your sexual function, your ability to concentrate and be focused. Cortisol is supposed to tell the system, "Okay, go back to normal as quickly as possible!" but if it doesn't, you're always in a hypervigilant stress mode, and that's when real health problems can occur.

So when it's chronic, then it's dangerous?

Exactly. That's why using everything in the stress relief toolkit is essential now, but I think two or three are most powerful.

One is being connected to other people and talking. When you're not at the office, you can let down and talk to anybody about your fears, certainly even with intimates at home. If you are panicked, though, you have to work on yourself. If you're panicked, the only thing you should be saying to loved ones is "Can you hold me?" Because anything to calm you down from your panic is good, but to dump that panic on a loved one will only make them more panicked; you'll drown together.

In terms of therapy, I always say to my clients, if there's something you desperately need from another person that you can't get from yourself, the biggest tragedy in life is that you'll never get it from them. Until you start giving it to yourself, they won't come through for you. Once you start giving it to yourself, you'll get help from the outside. It's a weird truth, I find.

So talk about this with colleagues not in your firm, talk about it with colleagues in your firm when you're in a somewhat centered space, and with intimates and loved ones at home.

Another important tool is to give back--serving in some way that makes you feel connected to hope and healing, something that makes you feel effective, because it challenges the notion that you have nothing to contribute, that everything's just going to get worse and worse. It reconnects you to positive movement in the world, and to your own agency, in a good way, [proving to you that there are] things you can impact.

Don't become a workaholic to compensate for the drop in your clients' portfolios. Make sure to take care of yourself; otherwise you'll be running on empty.

Speaking of danger, you know people get into such self-destructive behaviors at times like these--drinking too much, or overeating, or drugs. What do you do if you see somebody indulging in such behavior?

If it's a colleague you're concerned about, I would invite him to lunch, ask how they're doing, what they're doing to cope with this crisis, and when they told me, I would say, lovingly, "You know, how about doing this or that with me--let's go for a walk together" or whatever. Reaching out that way, and trying to build bridges, is so important. All advisors need supportive networks so badly at this point; they need lifelines.

You don't want to wait until a crisis to figure out a stress-relieving plan. It's not the best moment when you're already in a crisis, but you may have no choice. If you haven't done it yet, now may be the time to walk with a friend in the morning, to do emotional connection exercises with your loved ones.

Isn't that the same thing advisors should be telling their clients now?

Absolutely. Revisit what's most important to you. I do this exercise in my workshops.

If you believe that money is happiness, I ask participants to think about the one or two things they do that make them happiest. Then I tell them to think about how much it costs to do those things, and whether they're done best alone or with another person.

When people go through that exercise, they almost always come up with things that are free. For you it would be singing, for others it might be hikes in nature. For me it's mostly free--being with my family, holding my grandkids, being with my husband in a mushy way.

Most people would want to do those things with someone else.

Absolutely, unless they're introverts who get energy from being alone. Basically, people pick things that don't cost much money. Money really isn't happiness.

The other thing about the current crisis is that we don't know when it will end; this may go on for a long time.

Yes. Plus we don't have a complete understanding of how we got here. It requires so much surrender, and Americans are not very good at surrendering.

Advisors are not very good on surrendering either. Bob Clark always says advisors' main job is to protect clients from the financial services industry. And in this instance, at least in investment management, you've been exposed as being as clueless as everyone else . . .

Everybody wants answers, insurance policies, certainty. Living with uncertainty is hard, very hard.

But the way to deal with uncertainty is to perform these practices that keep you ...

Centered, connected to yourself--your best, wisest, healthiest self. And use the Serenity Prayer [of American theologian Reinhold Neibuhr], "God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference."

Learn not to try to control what you can't control and being at peace with that; there are so many things we can't control.

Are there behaviors to avoid in this crisis?

You know the Myers-Briggs test on thinking and feeling types? When thinking types get super-super-stressed, they revert to primitive feelings, and feeling types revert to primitive thinking. Me, as an off-the-scale feeling type, I'll get this kind of primitive logic: "If A, then B, then C, then D, I'll end up alone and unloved." Like that. Again, I think you shouldn't abuse substances of any kind, whatever your tendency to excess is--drinking, eating, smoking, even over-exercising. Go back to a sense of moderation. Be around people who are calm and have a positive effect on you, don't be around people who stir you up and talk about how awful things can get.

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