If your heart beats faster when you check the market update, your head swims when you scan The Wall Street Journal, or your throat dries up when you prepare to tell clients about their portfolio, you have what we could call money anxiety. There's a lot of it going around. The depressing economic climate, replete with extreme market volatility and revelations of big-time investment fraud, has many advisors and their clients in a state of high anxiety, if not outright panic. People are worried about what to do with their money, about not having enough money, about losing their job (a common fear for men), about ending up destitute (a particular fear for women). You or your clients may be suffering actual symptoms of anxiety, such as feelings of confusion or irritability, sweatiness or shallow breathing, or difficulty concentrating or sleeping.
There's evidence that financial anxiety may be especially prevalent among women. In an October 2008 poll by the American Psychological Association, 83% of women said they were worried about money, compared to 78% of men. Older women (44+) are most likely to feel stressed out, especially if they don't have the emotional and economic support of a spouse. They're often sandwiched between caring for elderly parents, sending kids to college, and somehow preparing for their own retirement.
But even at a time of so much doubt about the future, there are ways to cope and possibly to thrive. Progress begins with clarifying what money anxiety is really about, and figuring out the best way to reduce or resolve it. The following examples may offer a few pointers.
Q: For months now I've been working with my client, a professional woman in her 50s, on her retirement plan. But she has become more or less paralyzed since the market went into freefall, and I can't get her to move forward on allocating her portfolio. She has also postponed making a decision on selling her home and that of her recently deceased mother. How can I nudge her out of this state so we can start making some progress?
A: Your client may well be suffering from a double whammy of grief and anxiety. In fact, I wager she's mourning two losses: first, her parent (an enormous loss, regardless of the quality of the relationship), and second, her sense of financial security. The emotional and material bereavements, one on top of the other, are probably overwhelming her.
To reach this client, urge her to share with you her feelings of loss, sadness, fear, doubt, and anxiety. After empathizing with her, ask her about her mother's emotional legacy. What would her mother (or the best part of her mother, if the relationship was a negative one) want for her? What does she want for herself? Then ask what she most fears right now in her life and her finances, and listen to her patiently and with full compassion.
Knowing it may take up to a year before a person can move forward from a parent's or spouse's death, you might present basic options to her now: selling the house(s) vs. waiting for a while; settling on an asset allocation vs. taking no action, and so on. By offering these choices in bite-sized, manageable action steps, you'll avoid overloading her circuits at a time when she has so much else on her mind. If you push her to take action instead of respecting her anxiety and her mourning process, you could weaken your relationship with her. Instead, by listening "exquisitely" (to quote my colleague Ted Klontz of Klontz Coaching and Consulting) and gradually suggesting simple actions, you will be able to help this client move forward and to strengthen your connection with her.
Q: One of the primary benefits I have always tried to provide my clients is education. Over the years I've written my own primers on modern portfolio theory, the benefits of diversification, and even the findings of the seminal Brinson, Hood, Beebower study that confirmed the value of asset allocation. However, a retired client couple of mine of long standing has begun watching a certain loudmouth stock analyst on TV, and every week (sometimes more frequently) they call to suggest I should buy one of the stocks he has touted as a way to "improve our portfolio performance." They're otherwise lovely people and I don't want to fire them, but they're becoming a serious drain on my time. Help!
A: This probably isn't the first time a client enamored of some charismatic media personality has arrived in your office, dying to sign over all their worldly goods to the new savior. However, given the many stresses that you too are grappling with, I suspect that this fickleness annoys you more than it normally would.
My first suggestion, therefore, is to step back and ask yourself what you are feeling and thinking about the chaotic financial landscape. Are you anxious about the stock market's collapse? Does it seem that none of the rules you once trusted now apply? Are you beginning to doubt your beliefs and skills? Once you take a careful inventory of your emotions, stress reactions, and confidence (or lack thereof), you will be able to approach this couple with greater honesty.
One way to better empathize with this couple is to recall that in times of uncertainty, it's just plain human nature to gravitate to someone who seems to know what to do. Try to see your clients' jumping at this possible "miracle cure" as an attempt to allay their heightened money anxiety. Once you get past your bias that they're na?ve or misguided, you'll be better able to re-educate them in the investment philosophy that has worked well in the past. Just remember that in the current climate, they're more likely to doubt everything they once believed and to look for new answers. Reminding them of what you still consider to be true will take patience and perseverance on your part.
After you've tried this approach, you may find that your clients still insist on trying the TV guru's stock tips. If so, you could suggest that they take a portion of their portfolio and follow his instructions, then compare the results to the investments you've guided. (Be sure to document your own position carefully, so you're not blamed if Mr. Marvelous's picks don't pan out.) If the clients remain adamant that it's all or nothing, you may simply have to part company with them--but I hope it won't come to that.
Q: I appear to have become a couples therapist, and I don't like it. Since the economy and the markets started heading south 18 months ago, one of my most lucrative client couples have brought their troubles to me. I know they're mostly anxious about their (and my) lack of control over the markets, but every meeting with them--in person or on the phone--devolves into a shouting match where one accuses the other of sabotaging their chances of happiness. I've suggested they see a marriage counselor, but they say they're more comfortable with me. Well, I'm not comfortable! The kind of help they really need, I can't provide. What's the best thing to do?
A: Money has been the leading source of couples conflict for most of the past 20 years. Although it's tied to our deepest emotional needs for power, security, independence, control, and self-worth, many of us are unaware of that emotional load, so we fight about it without understanding what the battles are about. That's why polarization into oppositional stances is such a common dynamic in the power-struggle phase of relationships. And the more anxious people are about money, the more extreme they become in their attitudes: savers become super-savers, spenders become super-spenders.
However, that doesn't mean you have to be the dumping ground for these clients' verbal abuse. To address the situation, I would suggest that you meet separately with each spouse. Ask about their hopes and dreams, and then about their fears and concerns. If each blames the other for his or her money anxiety, I would give this an empathetic but brief hearing. Find out if there is anything they appreciate in their spouse's attitude toward money, or anything in their own money behavior that they would like to improve. To wrap up this one-on-one interview, you can give each client your honest (and hopefully kind!) advice about changes that might help the couple cooperate better and move forward together.
When you subsequently invite both clients to join you in your office, you'll know whether any shared goals emerged from the separate sessions. If so, you can help the couple strategize ways to move toward these goals.
I would begin this joint session by asking each spouse to share an appreciation of the other with respect to money or some other aspect of their lives together. I'd also set some ground rules: no interrupting, of course. Also, before voicing an opinion, each spouse must repeat what the other said and comment on what made sense about it from the other's perspective.
If recriminations start to fly again after all this groundwork, be firm in stating that you cannot continue working with the couple unless and until they seek help: counseling, a weekend workshop, or ongoing therapy. In circumstances like these, I've done therapy or coaching with individuals and couples sent to me by financial advisors. After a series of sessions, these clients can usually return to work more productively with their advisor.
When clients come to you exhibiting signs of high anxiety (whether about money or something else), take time to help them identify their fundamental concerns and decide what can be done to alleviate these worries. You might consider assigning these folks the task of writing down what concerns them, and what they will do if the worst happens. This choreographed worry session can help lighten the pressure of fears that are weighing them down (you might try it too, if money anxiety is plaguing you!). Your clients can then begin the process of managing their stress, and moving forward toward their goals.
Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Client Connection: How Advisors Can Build Bridges That Last, available through the Investment Advisor Bookstore at invest-store.com/investmentadvisor. She also offers money psychology teleclasses for financial advisors and for the general public. E-mail Olivia at firstname.lastname@example.org.