Dispensing financial advice, it turns out, has quite a bit in common with firefighting and air traffic control: They’re all regularly cited as being among the most stressful occupations. Probably the biggest source of anxiety for a financial advisor is the potential for losing money for a client. Unfortunately, watching client accounts sink in value is exactly what happened to many advisors during the 2008 financial crisis, which many regard as the most stressful time of their career.
During the crisis, some financial advisors discovered that they were more shaken than their clients, letting their emotions overcome them and encountering difficulty in making the most basic business decisions or even picking up the phone. One financial psychologist told The Wall Street Journal that advisors who had personally lost money in the downturn were especially stressed, and that guilt and embarrassment were often the reasons why they did not want to deal with worried clients.
The latest AdvisorBenchmarking study—which was conducted about a year after the crisis—shows that financial advisors clearly understood the importance of communicating with clients in the depths of the crisis. It also indicates that financial advisors modified their behavior in an effort to reassure clients and answer questions, shifting to more personal communication methods, such as phone calls and in-person meetings, and cutting back on less-personal methods like email. For example, 83% of survey participants communicated to their clients over the phone in 2009, a lot more than the 51% of advisors who did so in 2008. In 2009, 76% of advisors used email for client communication, down from 84% the previous year.
Sometimes, the cause of stress for financial advisors isn’t the communication method, but the content of the communications. It may be more stressful for advisors to deliver difficult news or prod a change in behavior, since that may be viewed as personal criticism of a client or an invasion of the client’s privacy. A 2010 survey from Principal Financial Group found that, when advisors responded to clients about improving their financial situation, the advice they most frequently needed to give their clients was to pay down debt, save more for retirement and spend less money—sometimes a more difficult conversation than one about asset allocation or wealth transfer.
Stress can also be related to an advisor’s personality type, which can determine how they respond to what the market is doing. Every advisor can be an extrovert if the market is doing well. But if advisors react to market troubles with passivity or client avoidance, their level of stress is likely to be higher. Ditto for advisors who tie their value into how a client’s portfolio performs. Advisors with emotional discipline, who regularly reach out to clients to ensure they