The Psychology of Advice: High Anxiety

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.