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.