As a nation, we’re suffering from a serious case of jitters.
And why not? Terrorists here and abroad are targeting innocent people who could be any of us — schmoozing at a holiday party, cheering at a marathon, taking selfies at a rock concert, meeting friends at a sidewalk café. Leading candidates for president have responded by vowing to build walls around our borders or kick capitalism to the curb. In the meantime, the low price of oil has worried investors around the globe. In the first two weeks of the year, the Dow Jones Industrial Average plummeted an incredible 1,437 points.
Fear is useful if it alerts us to a real threat, but living in a continual state of fear can lead to short-sighted decisions or decision-making paralysis, as well as to physical and emotional issues that impair people’s overall well-being.
In these unsettled days, how can you identify fear-based attitudes and behaviors in your clients and yourself? What can you do to restore a more balanced perspective, especially in making financial decisions?
The Faces of Fear
The goal is not to stop feeling fear. “Fear is good when it warns you of a real danger so you can take action,” explained psychotherapist, speaker, coach and author Olivia Mellan. “But when it overwhelms you, it takes you out of what I call your ‘rational adult thriving mode.’ Your reptilian brain takes over.” Over the longer term, fear can lead to decision paralysis, insomnia, addictions, physical ailments, irritability and strained relationships, among other dysfunctions.
But maybe you’re just feeling anxious? There are neurobiological distinctions between fear and anxiety, as psychologist Harriet Lerner, author of “The Dance of Fear,” pointed out in a 2009 issue of Psychology Today. Fear is associated with the “sudden re-arrangement of your guts when an intruder holds a knife to your back,” she wrote, while anxiety is “the mild nausea, dizziness and butterflies in your stomach as you’re about to make a difficult phone call.” (See “How Fear Works.”)
Still, the boundaries are blurry. A client who can’t sleep, has headaches and feels sick when he watches the daily Wall Street report may hesitate to describe himself as fearful or anxious. Instead, he says, “I’m incredibly stressed out.” By contrast, Lerner suggested, a mother of the bride may say she feels “sheer terror” at the possibility that her daughter’s wedding dress won’t fit.
Fear is really a spectrum spanning from stress to terror. Whatever degree of fearfulness you or a client feels, it needs to be addressed if it affects your healthy functioning in the world. The good news, Mellan said, is that fear can often offer an opportunity for growth.
Fear, Anxiety and Financial Advice
In this day and age, Mellan said, a free-floating feeling of being unsafe in the world is rampant. For baby boomers, chronic anxiety may have its roots in Cold War threats of “mutually assured destruction,” while younger generations can choose from more recent menaces. Because it doesn’t give us any cues about how to respond, Mellan said, “I can’t think when anxiety would be a good thing.”
By contrast, fear is more likely to be a reaction to a specific event such as a terrorist attack or market collapse — “something that triggers a fight-or-flight response,” she suggested.
While many people might call themselves anxious but not fearful, investors can be both anxious and fearful. The result, she noted, is that “people get frozen.” A client may feel unable to decide whether to leave assets at risk or invest them in a “safe” fixed annuity. Other clients may put off a dream anniversary trip for fear of terrorism, or debate whether to buy gold instead of the second home they’ve wanted.
Fear of Financial Loss
Most of the client fears that advisors encounter are about losing money, of course. Whether the market is simply volatile or plunges as it did earlier this year, you’ll hear from clients whose fearfulness ranges from anxiety to panic.
Ideally, you’ll be able to show these clients that they still have enough money for what they want to do. However, getting through to them may take more than just facts and figures.
Mellan’s suggestion: Gather these clients to revisit their life goals. Ask them, “What makes your life worth living? What gives your life pleasure and meaning?”
Having experiences, not buying things, tends to be what people say they value most. Next, ask them, “Do today’s economic events make a difference in enjoying these priorities?”
As you discuss their views on well-being and quality of life, you might mention that once people reach an annual income level of $75,000 or so, research shows that more wealth doesn’t appear to make them much happier.
Paradoxically, giving to others can comfort people worried about financial loss. You don’t have to be wealthy to reap its benefits. “If you give money to others, your brain says, ‘I must have enough,’ which helps ease your stress and anxiety,” Mellan explained.
Mellan’s Tips for Reducing Fearfulness
- Slow down your breathing. If you’re feeling anxious or afraid, ground yourself with a simple “7-11” breathing exercise. Breathe in for a count of seven, then out for a count of 11. Be sure your out breaths last longer than your in breaths. Repeat until you feel calmer.
Name your fear. Write it down along with its intensity level, from one to 10. This helps you step away from it and examine it more logically, heading off panic.
Imagine the worst case. Write down what you will do if what you fear comes true. Will it affect what’s really important to you? What resources will you have to cope with it? Write down your thoughts.
Imagine that the worst doesn’t happen. Take time to visualize things coming out well. What will you do then?
Learn your personal antidotes to stress. What helps you feel calmer and more rational? Taking a walk by yourself, connecting with others, listening to music, meditating? Laughter can also be a great way to counteract worry.
Mellan loves to sing. “It puts me in a completely different state of consciousness,” she said. Her go-to de-stressor is a YouTube video of Broadway composer and actor Lin-Manuel Miranda and friends singing “L’chaim (To Life)” and dancing at his wedding reception.
She also recommends mindfulness meditation, which “helps you separate yourself from your thought processes. When I meditate, I notice my worries, call attention to them by name and brush them aside.”
Follow your bliss. As a long-term anti-fear strategy, do more of what makes you happy. Maybe it’s getting home earlier to play with the kids, taking ballroom dancing classes or fishing on your favorite patch of river. If your panacea is temporarily out of reach when you feel super-stressed, you might set up a visual reminder as a screensaver or in a digital photo frame.
Give something of yourself. One of the quickest ways to help reduce your own fear is to help others. By offering financial literacy workshops or volunteering your time to help a community organization, you may also enable other people to overcome their financial fears. “Money is both powerful and taboo, and yet it’s the emotional foundation for so much in our life,” Mellan said. “As an advisor, your active role in educating and guiding can be an incredibly stabilizing thing for the community.”
Fear Can Reveal What You Really Want
Few things could be more terrifying than watching on television as thousands of people die in a horrendous suicide attack near where your spouse works — and not being able to reach him to see if he’s all right. That happened in September 2001 to Kathryn Nusbaum, then working at Morgan Stanley. As Mellan recounted in a September 2006 IA column, Nusbaum finally reunited at their midtown Manhattan apartment with her husband Bob, who had been in Merrill Lynch’s World Financial Center office. The 9/11 tragedy prompted the couple to do some deep soul-searching about the life they wanted for themselves and their new baby. The result: They opened an hourly fee-only financial planning firm for middle-income clients in a quintessentially middle-American city, Pittsburgh.
“What’s important about this story,” Mellan said, “isn’t the fear they endured. It’s how they processed that fear. They asked themselves, ‘What’s important to us? What do we really care about?’ Fear became a catalyst of growth for them.”
In other words, fear doesn’t have to paralyze us. Approached in the right way, it may jolt us out of a rut, making us realize what we really want and need to live a more balanced life.
Distrust: The Flip Side of Fear
The societal danger of fearfulness featured strongly in the 2016 State of the Union address, Mellan observed. “Will we respond to the changes of our time with fear, turning inward as a nation and turning against each other as a people?” President Obama said in the speech. “Or will we face the future with confidence in who we are, what we stand for and the incredible things we can do together?”
Mellan concluded, “I think he is saying that if we don’t ground ourselves in optimism, it can lead to hypervigilance and not being willing to trust anyone.”
People tend to become distrustful of what they fear — whether irrationally or justifiably. For example, Americans’ fear of a Japanese attack in World War II led us to distrust Japanese Americans.
Trust in people and institutions plays a large part in a nation’s sense of well-being. It’s one of the key variables measured by the World Happiness Report, which is published by the United Nations Sustainable Development Solutions Network.
The U.S. ranked 15th in the latest edition of this report, below such countries as Switzerland, Iceland and Denmark. Distrust was the strongest factor bringing down the U.S. ranking, according to one of the report’s editors. Even though some other countries were harder hit economically during the global financial crisis than ours, the willingness of their citizens to work together for the common good — evidence of a more trusting and supportive culture — resulted in higher happiness rankings.
Are We Too Diverse to Trust Each Other?
Since many countries deemed happier than the U.S. have relatively homogeneous populations, it’s worth asking whether Americans will always find it harder to trust because we’re such a diverse nation. Kol Birke has a good answer.
“Homogeneity certainly makes trust and life satisfaction easier, but it has downsides too,” said Birke, a senior vice president and financial behavior specialist at Commonwealth Financial Network.
He believes societies can learn and change from experiencing distrust. “The times we have given in to our fear — for example, the internment of Japanese American citizens in 1942 — have cost us economically, morally and in other ways,” he said. “We saw what happened, and I believe we are evolving as a result. As George Vaillant of Harvard Medical School has pointed out, genetic evolution takes millennia, while social evolution can take place in decades.”
Birke wears another hat at Commonwealth as a technology product evolution specialist, which makes him especially aware of an important difference between now and 1942: social media. Facebook, Twitter, YouTube and others “are a fantastic amplifier,” he said. “They’re dangerous because they make it easy to spread fear, but they’re helpful because they can quickly assuage fear or enable us to rally together.”
Controlling Fearfulness in Yourself
Some degree of stress appears to be necessary for humans to function well. However, Birke noted, “We need a very, very small amount of stress. Too much, and it becomes negative ‘dys-stress’” — i.e., distress.
One of the biggest stresses for an advisor, he said, is compassion fatigue. “If we have another period like 2008 to 2009, when the broad market rout left advisors feeling they’d let their clients down, it’s going to be hard not to feel more fatigued and stressed out. You need to be in a healthy emotional place to help others: sleeping enough, eating well, moving well.”
If you’re concerned about losing your objectivity in an atmosphere of fear, he suggested enlisting the help of a friend or colleague. “Give someone permission to call you out if fearfulness seems to be affecting your behavior. You might say, ‘I’m worried that I’m going to become more fearful or stressed about whatever. Tell me if I am.’ I call this ‘assigning a mirror.’”
In most cases, Birke added, the biggest risk isn’t fear per se. What’s more dangerous is that stress and burnout will exaggerate fear to the point of distorting decision making. For example, fear of recession may lead an advisor to implement an overly conservative asset allocation model. But some clients can’t afford to give up opportunities for growth, while others won’t tolerate being in too-conservative investments. It’s critical to avoid fatigue, stress and burnout in order to maintain focus on each client’s best interests, he emphasized.
Birke’s Tips for Coping With Fear
Assess your stress. Birke suggested asking yourself or your client, “In what ways is stress helping or getting in the way?”
Put it in writing. Birke said, “I often advise clients to write down the things they’re worried about, along with the best case scenario, the worst case scenario and the most likely scenario.” In recommending that you set it down in black and white to gain perspective on what scares you, he and Mellan are completely in sync.
Examine your assumptions. “The notion here is to promote accurate thinking,” Birke said. “Ask yourself, or invite clients to ask themselves, ‘What am I basing this assumption on? What are some other data I could look at? And what am I going to do about it?’” Next, he suggested, identify one or two small actions that would be productive. “Action is said to be the antidote to anxiety, but that doesn’t mean just any action. The emphasis needs to be on ‘productive.’”
Try to shrink your worry. Birke often starts by asking, “‘If you feel overwhelmed, what level of stress are you feeling on a scale of one to 10?’ If it’s a nine, I ask what they could do to bring that down to a seven or eight.” Often, he said, what they do will actually bring their stress level down to a four or a five. But if they were challenged at the outset to get down to one, the task might seem hopeless.
Loosen the reins. Scientists studying the nature of hope have found it has two parts: prioritizing what is most important and achievable, and letting go of what is out of our control. By following the guidance of theologian Reinhold Niebuhr’s Serenity Prayer (“God grant me the serenity to accept the things I cannot change, the courage to change the things I can and the wisdom to know the difference”), people are often able to loosen the grip of stress, anxiety and uncontrollable fear on their lives.
Making a ‘Safe Place’ for Clients
Most clients are tense when they visit their financial advisor’s office, even under the best of circumstances. (The medical world knows it as “white-coat syndrome”: the tendency for blood pressure to climb in the doctor’s office.) How can you keep the experience from increasing their stress and fearfulness?
Model a state of calm. “Don’t let your own anxiety leak out onto the client,” Mellan advised. If you need to calm yourself before a meeting, meditate, listen to music or go for a walk.
Create a physical environment that feels safe. That means a comfortable and friendly setting. Formal dark paneling, plush carpet and hushed surroundings meant to convey gravitas can unintentionally intimidate. You may want to set up one of your offices with a couch, side chairs and a coffee table, like a living room. Mellan added that some clients may be more relaxed if you meet at their home, although that won’t work for everyone.
If you notice tension, slow down. Many well-meaning advisors try to cover too much ground, too fast. If clients are confused or anxious to begin with, you may only increase their stress level. When coaching members of Commonwealth’s advisory network, Birke sometimes suggests as an exercise that they practice slowing down their words and lowering their tone for the next week.
Don’t avoid around the truth. You may worry that a scary topic like death will make a client fearful, “but there’s a trust-building honesty to having talks that others tiptoe around,” Birke said.
Use clear and simple language. If a client can’t understand you, it may lead to distrust or anxiety.
Take more breaks if you sense fear. “You might say, ‘I’d love some water; can I get you something?’” Birke said. “This allows people to calm down and regain their balance.” This tactic can work in other situations, too. Planner Barbara Shapiro once told Mellan that when clients’ eyes glaze over, she takes a break to talk about their golf game or their grandchildren.
Be someone they can lean on. The analogy Birke uses is a stone archway. “Because the keystone is there, the other stones don’t fall,” he said. “The architectural term is ‘tensegrity’: tension leads to integrity of the structure. People can lean on you and stay calm if you stay calm.”
Get Help if Needed
“Be compassionate toward yourself,” Mellan counsels stressed-out advisors, guidance you can share with fearful clients. “Your fears may not be wholly, or even partly, within your control.” (See “What We Really Fear.”)
She added, “If you’re feeling fearful and can’t hide it, it’s better to talk about it than to try to sweep it under the rug. It will make others feel unsafe if your fear leaks out, polluting the entire interaction.”
When fearfulness affects your well-being, causing insomnia or other emotional or physical problems, and your own coping mechanisms don’t help, talk to a professional. A trained psychotherapist or psychologist may be able to help you distance yourself from your fears so you can reduce their impact on your life.
Apocalypse Now? Been There, Done That
Yikes. Has there ever been a scarier time than this?
Not for a while, perhaps. But back when America’s greatest economic crisis was at its worst and a genocidal world war was brewing overseas, a U.S. president declared, “This great nation will endure as it has endured, will revive and will prosper.” Famously, Franklin Roosevelt went on to say, “[T]he only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
Try to identify fear-based attitudes that may be paralyzing rational thought, in your clients or yourself. By applying Mellan’s and Birke’s recommendations, you may be able to recover a more balanced perspective. The optimism and resilience you gain will help you “convert retreat into advance,” strengthening the financial and other life decisions you continue to face.
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