Not since 2008 have financial advisors felt so dispirited and turned off. Weary of the heightened regulatory requirements that make them work harder but earn less, many FAs are showing diminished zest for their jobs.
That’s what clinical psychologist Alden Cass told ThinkAdvisor in an interview in January. His specialty is the brokerage industry, and 50% of his international practice, based in New York City, consists of advisors, both wirehouse FAs and independents.
Dr. Cass, 40, is known for conducting pioneering research on male retail brokers in the late 1990s. The study showed that 23% of the group was diagnosable as suffering from major depression. That was four times the incidence of men in the general population. What’s more, the most depressed brokers were those who made the most money, the study, released in 2000, revealed.
Advisors who seek Cass’ help today are feeling indifferent – largely, and unsurprisingly, because they’re making less money. Blame the onerous regulatory requirements, combined, of course, with the down but highly volatile market; plunging oil prices; global financial turbulence; pay cuts; interest rate uncertainty; fear of recession and persistently low bond yields.
New York City native Cass provides hybrid help to FAs: he’s a performance coach as well a psychologist. His advisor clients – who are self-referred – work at firms that include Bank of America Merrill Lynch, Morgan Stanley, UBS and Stifel.
Under his Competitive Streak Consulting practice, he also conducts performance workshops designed to identify self-defeating behavior and boost productivity and job satisfaction. He has held such programs for the Investment Management Consultants Association (IMCA), the Security Industry Association and the Money Management Institute, among other organizations.
Cass’ unprecedented research found that beyond depression, the brokers he interviewed were at higher risk for burnout, emotional exhaustion, substance abuse and anxiety disorders than the general population.
Author of “Bullish Thinking: The Advisor’s Guide to Surviving and Thriving on Wall Street” (Wiley 2008), he holds workshops, too, on how to become a financial therapist during uncertain times and has trained the regulatory community on how to identify white collar criminals.
Cass’s periodic “Wall Street Wives/Husbands Club” meetings help FAs’ spouses become more aware of industry stresses and teach strategies to have their own needs met by being more assertive.
ThinkAdvisor talked with Cass — whose clients also include corporate attorneys and athletes — about why financial advisors are feeling so crappy and how they can remedy the situation. Here are highlights:
ThinkAdvisor: What’s the most common complaint you’re hearing from financial advisors?
Alden Cass: That they’re working harder and earning less than ever before. They’re wracked with issues of compliance, red tape and regulation. To make money now, it’s become a full-time job trying to keep up with all that. It requires a tremendous amount of detail-oriented regulatory paperwork to get anything processed at the wirehouses — and advisors don’t have the time. That’s made doing business harder than ever.
What’s primarily driving these FAs to your couch?
They’re no longer making the same amount of money as before. They tell me: “Why do I need this anymore? This isn’t what I signed up for — at this stage of my career, to be working this hard and earning less.”
How would you describe their state of mind in clinical terms?
Apathetic. Apathy is the step before burnout, where [people] don’t enjoy what they’re doing anymore. With advisors, it’s because of the regulatory nature of their firms. After burnout comes depression. Advisors feel like their hands are tied, and it’s holding them up from moving things along quickly. What else do they say is troubling them?
These months of down markets, where they’re not making as much money as they used to, are making them fearful of how much worse it could get if clients start leaving.
What are their feelings about what’s happening globally; the problems in China, for example?
None of my clients have reached levels of high panic, but there’s definitely some early warning signs. It’s almost like advisors’ emotion-driven behavior during the 2008 downturn. You’re seeing an early panic button being pressed. When they hear the word “crisis” about the global economy mentioned on the news, they have an exaggerated startle response. It’s absolutely [affecting] them with fear and uncertainty in their jobs.
Is that across the board with the advisors who come to see you?
A lot of them have brushed it off a little as if it’s not a big deal. They feel they’re adequately protected with diversification. But when a freight train is about to hit and you’re like, “Oh, it’ll be fine,” maybe that’s a problem, too. However, a lot of the more seasoned advisors are able to get past it and haven’t reached the drastically overly emotional levels you saw in 2008.
What are advisors telling their clients about investing in the current market and economy?
“Stick to a longer term investing strategy, and things will stabilize: it could be a buying opportunity.” But I’ve been hearing about clients freaking out and jumping ship. At this time of global economic uncertainty, advisors, more than ever, have to become financial therapists for their clients – almost like a rock for them.
What’s the state of mind of FAs working mainly in bonds?
Those in muni bonds are feeling paralyzed because they have very little product flow in the business. They feel like that whole area is depleted. So advisors who are one-trick ponies, with one focus as their bread and butter, are now paying the price of not being diversified.
Do you use talk therapy or behavioral therapy with FAs?
Both. I help them understand what they’re feeling and that their self-defeating, self-destructive thoughts — what I call “bearish thoughts” — are getting in the way of succeeding and are creating behavioral paralysis. Bearish thoughts impact their job, their performance and their quality of life, in addition to how they manage their clients.
How do you help advisors who need intense counseling?
I use my clinical background to help them navigate the pitfalls of emotional burnout; for instance, when they’re self-medicating through alcohol or prescription drugs – things that have gotten in the way of their performance. I also help with problems in their marriages or with depression, anxiety disorders or panic attacks, which have been impeding their overall quality of life and performance.
What are the insights and results that advisors can expect, in general?
Understanding that becoming more emotionally disciplined is the only way they can give their clients the type of service that’s required to be a [successful] financial advisor.
FAs should be unemotional in making clients’ investment decisions. But are they actually emotional people, for the most part?
A lot of what they do is emotionally driven, and oftentimes that’s the problem. What drives them to call their clients or to get out in the morning is based on emotion – a fear of failure, of not succeeding. And that drives their performance. But those are the types of individuals that go into the industry – people who tend to have a perfectionistic mindset and are very competitive. Are branch managers aware of the warning signs of FA apathy and burnout? If so, are they trying to help advisors avoid these conditions?
There’s so much on their plates that they have trouble looking above their desks to even notice what’s going on with individual employees. This is because of expectations higher up in the food chain and the regulatory issues they’re dealing with. But some branch managers have told me that they see a disconnect between advisors’ expectations of how things should be and how they really are: “How come we have to pay for advertising and marketing ourselves?” “How come I can’t have that check?” They feel entitled [to such things], and this is where the apathy comes in.
A guy who’s been working at a firm for 25 years and doesn’t seem to care anymore just wants to coast for the next 10 years. And I feel that some advisors are doing that. When they’re in their 50s, they don’t want to work as hard as they did in their mid-30s to early 40s. It’s hard for a branch manager to motivate them to get back that fire they once had when they were desperate and hungry for new assets.
What’s the biggest problem of investment bankers who seek your help?
Burnout. In order to survive moving up through the ranks, they end up having prescription medications and [recreational] drugs to relieve stress, and that often creates more problems than benefits.
What are traders complaining about?
It’s very hard for them to deal with the [market’s] ups and downs, which they feel are random. It makes them feel powerless. When they don’t come home with a paycheck for two months, it’s very overwhelming.
How do you help them handle that?
If you look at some individuals’ performance the year before, they ended up making close to a million dollars. So they have to be able to think back and say, “One or two bad months do not make a season.” They’ve got to look at the bigger picture and during times of loss or setback, develop a healthier perspective.
How do FAs overcome what some perceive as the stigma of getting psychological help?
At first, we’re talking about helping them meet their bottom line, how to be more productive, more efficient, more motivated at work, and seeing potential gain in their performance and the amount of money they make.
Tell me about the “Casualties of Wall Street” research study you did in the late 1990s.
Based on the numbers, there was an unprecedented amount of depressed male stockbrokers during a time when the market was smoking hot. That was a problem. They had very poor coping skills. Whether or not that remains the case or is worse, I don’t know because I haven’t measured it in many years.
You found that it was the most successful brokers who had the most mental or emotional problems.
Yes. Those dealing with emotional turmoil were making the most at the time of the study. However, in the eight-month anecdotal follow-up, 25% of those individuals were no longer at their jobs – either fired or left because of lawsuits, maybe, or because they were so depressed [among other reasons]. How do your clients typically discover you?
A lot of firms have farmed out mental health services to external Employee Assistance Programs, which helps connect these guys to people like me.
When I interviewed you about broker burnout in 2003, you said that because of the stigma linked to therapy, FAs were reluctant to use those assistance programs. So has that attitude changed?
Thirteen years ago the paranoia and stigma were there because the programs were very new. Over the years, it’s become more of a norm to use them, and a lot of advisors have been able to get help not just to improve their financial situation and careers but in how to deal with family crises, such as divorce.
Why did you choose to specialize in financial advisors?
A friend who got a broker job at PaineWebber had always been happy-go-lucky. But after six months with the firm, his personality and attitude changed. He was angry — he’d tell me that he was throwing phones at the wall. It sounded like he was depressed. I looked into the research and found that none had been done about stockbroker depression since the Great Depression. So I did a study on it. And as I was interviewing these guys, I found that I loved working with them. I felt a connection.
In what way?
I’m probably wired very similarly: Highly competitive, fear of failure, driven. There’s a common thread. And that population was underserved. It helped me make the decision to specialize in [the brokerage industry] because they don’t teach you how to work with financial advisors in graduate school. It’s a lifestyle.
You felt you could help them as a culture?
Right. If you’re driven by anxiety and fear on a daily basis, you won’t sleep at night, and it’s going to affect your physical health. Sometimes you’ll make poor decisions because you want to maintain your edge, like abusing prescription medications.
What’s the takeaway for FAs who get counseling?
If you’re good at what you do and can learn how to enjoy and improve the quality of your life through your job or perceive the stresses in a healthier way, you can survive. I have clients who have proven that.
Tell me your thoughts about hedge funds employing in-house performance coaches. The new TV series “Billions” (on Showtime) depicts one.
Many years ago, I interviewed to be an in-house coach at SAC Capital [hedge fund founded by Steven A. Cohen. The firm pleaded guilty to insider trading. The Securities and Exchange Commission has barred Cohen from managing outside money for the next two years]. So I can identify more than you can imagine. I was one of about eight people who interviewed for that position. It was right after their in-house psychiatrist died. He’d been there for 20 years.
A psychiatrist is an M.D. Isn’t it unusual for a firm to maintain an in-house psychiatrist?
Not in the hedge fund world.
So did SAC offer you the job?
They didn’t offer anyone the job because the whole SEC thing came down at that point.
— Check out Advisors in Pursuit of Happiness on ThinkAdvisor.