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How a Wall Street Psychologist Helps Advisors Cope With Crisis

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Financial advisors should tell clients, “with conviction,” that they need to “have ice in their veins” to stay on track through this scary, unprecedented crisis. Only outstanding FAs who do so will continue to build their practices, argues clinical psychologist and performance coach Alden Cass in an interview with ThinkAdvisor.

Right now, he’s helping advisors themselves cope with the massive market decline set off by the coronavirus pandemic, coaching them over the phone and through video conferencing platforms like Zoom.

More than half his global Competitive Streak consultancy clients are financial advisors. Among others: the top four hedge funds, as he so defines them; traders; corporate attorneys; and athletes.

The New York City-based psychologist, 44, is known for his pioneering late-1990s research on male brokers, which found 23% of the group met diagnostic criteria for major depression — four times the incidence of men in the general population.

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In our interview, he discusses how FAs are dealing with panicky clients. His recommendation: Become a financial therapist to reassure them; then supply specific ways to manage. At this critical time, advisors need to “overcommunicate” with clients, he maintains.

The coach’s FA clients are making it through partly by telling themselves that a turnaround is likely to arrive on May 1. If that doesn’t occur, though, he expects to see a steep drop in morale triggered by advisors’ “bearish” thoughts.

Stay-at-home orders are severely cramping their style, Cass notes. In the interview, he offers ways to endure that constraint and still be productive.

The coach, who wrote “Bullish Thinking: The Advisor’s Guide to Surviving and Thriving on Wall Street,” co-authored with Sydney LeBlanc and Brian F. Shaw, numbers self-referred FA clients from Charles Schwab, Goldman Sachs, JPMorgan, Merrill Lynch, Morgan Stanley and UBS, among others.

ThinkAdvisor interviewed Cass on March 25, with a follow-up email exchange on March 31. His main message: Cater to current clients right now; worry about acquiring new ones later. And don’t “freeze” or allow yourself to feel “beaten down”; adopt a “champion mindset” versus a “victim mindset.”

Finally, facing the likelihood of some new catastrophe surfacing in the future, he suggests preparing by employing his mathematical “Happiness Formula” to come out ahead.

Here are highlights of our interview:

THINKADVISOR: Clients’ portfolios have been decimated. How are your financial advisor clients dealing with the crisis?

ALDEN CASS: There’s a lot of shock among advisors, almost like a fight-or-flight response. But the ones I work with think that May 1 will be an inflection point for both the coronavirus and the market. They’ve given themselves some hope that things can change on the upside.

Do you estimate the same timing? If not, what do you foresee?

That’s the ideal perspective. If there’s no progress or things worsen by May 1, we’re going to see a lot of bubbles pop in terms of advisor mood and how they handle things. We could be in for problems with their morale and mindset. That’s when they have to not become victims of negative — bearish — thoughts.

What should FAs try to make clear to clients right now?

That this decline wasn’t [caused by] the market, per se. It was an aberration; therefore, you can’t allow it to change your course: You’ve got to be strong and have ice in your veins to get through it.

That’s being candid, all right!

Only the best advisors who can convey that with conviction are going to continue to build their business.

In a nutshell, what’s your salient message to FAs who work with you?

I’m hammering home that they have to convey to clients that this is temporary, changeable and manageable over time — that we’ve overcome the sky falling before, and we can do it this time, too. Advisors need to hammer home that point within their own heads, too.

What’s a major issue about their practices that’s troubling them?

The thing that’s making it extra difficult is that prospecting is off the table. They’re concerned about how long this drought of being unable to bring in new business will last, and that things could get worse.

How do you coach them about this?

I say they can’t allow it to beat them down, freeze them and cause panic — because it’s just a temporary pause. I advise them to cut out their marketing budget and any extra expenses for a short run to try to insulate themselves. They’ll feel a lot more comfortable and can start rebuilding when the elevator stops going down.

Are FAs worrying that they may lose their jobs?

Surely the younger or underperforming ones are. However, this is almost like a free-pass period when they’ve got to get their stuff in order and focus on how they’re going to build their practices in the “new world.” If the way they were doing business before wasn’t working, this is a great opportunity to pivot and, for example, learn how to use technology platforms to be better at reaching new clients and bringing in new business.

What should advisors be zeroing in on most client-wise right now?

Focusing on the clients they already have. I stress that this is where their value-add comes in: being a financial therapist to current clients.

Please elaborate.

You can’t worry now about where the next client will come from. You have to focus on catering to the needs of current clients but use that as a networking opportunity [to reach] their friends, to whom you can offer the same types of services, while stressing your competence and conviction.

That’s planting seeds for later acquisition, I assume?

Yes because then, current clients will make referrals to friends: “This guy got me through it. He found me opportunities during the crisis.” Right now, advisors can offer free help to clients’ friends by explaining what’s happening in the markets.

Please talk about FAs as financial therapists.

Now clients are relying on their advisors more than ever to give them some certainty in a very uncertain world. That means they need to overcommunicate with them: Call them more frequently and be reassuring to get them through these rough waters. They need to communicate that they’ve [structured] their portfolios to help them lose less relative to everyone else.

What specifically do you suggest they say?

Clients need to understand that the products they’ve put them in are built to ride out this storm. They should be reassuring clients that this could be a buying opportunity: We can get products at much lower prices and save you a lot of money in the long run. It’s about believing that a stock or product you believed in two months ago will still have the same [potential value] after we get this virus under control. The point is not to waver.

So, do your FA clients think this a good time to buy?

Not until the elevator stops going down. Their mindset is wait-and-hold — then find the opportunities. But the traders I work with have a much stronger risk appetite, and they’re buying left and right.

How else are you recommending advisors interact with clients apart from phoning them?

This is a great opportunity to learn a new way of working with clients. Even though they feel disconnected from the world, they can use platforms like Zoom to engage. While everyone is trapped at home, it’s a chance to reach out and overcommunicate. And technology can be a significant benefit to an advisor’s business [overall].

What are some techniques for using tech platforms right now?

Offer a webinar or a Zoom conference with clients and their friends to talk about today’s market as compared with the 2008 crisis. Seasoned advisors have been through scenarios where the sky was falling and have come through them. That’s using [behavioral finance] “anchors” from the past to reassure people in the present.

How are stay-at-home orders going over with advisors?

One of the biggest issues for them is dealing with being trapped in their homes. It goes against their nature: They like to engage with people — they’re social creatures. But they need to use this very unstructured time to their advantage: It’s about scripting your days — breaking down each task in every hour into things that are positive for you.

How can FAs prepare for dealing with the next horrible event down the road?

It’s important to keep a grounded [relationship] between expectation and reality. If the expectation-reality gap widens, there’s a big problem. That’s what happened when the dot-com boom popped, and so advisors became depressed.

How can FAs better prepare, then?

I’ve created a mathematical “Happiness Formula” [trademarked]. It’s a form of defensive pessimism that prepares you for bad things and is part of being resilient.

What’s the formula?

Happiness equals Reality divided by Expectation. That is, when a person’s expectation of how something will turn out is closer in alignment with the reality of how it does turn out, they’re happier than if, in contrast, their expectation is exceptional and the reality turns out to be just average. That makes them feel extremely disappointed.

How do you employ the formula?

Create three lists: First, “The Worst Case Scenario,” which would be, for example, coronavirus cases double every three days, we could be out of work for nine months, the market is tanking and everyone is cashing out.

What’s the second list?

“The Best Case Scenario”: Things will go back to normal in one or two months; the markets will be back to where they were at their strongest; and we’re all going to return to work and have lunch with clients very soon.

The third list is…?

“The Most Likely Scenario.” This is the most important list because it keeps you grounded and brings reality and expectation closer in alignment. The first two lists were extreme and very black and white. The key to the third one is to make it gray. So it could be: Likely we’ll have a two-to-four month reduction in all work and a lot of volatility in the market — the market will stabilize, and a good company will be [evaluated] for its true value. Sports and many cultural activities we used to enjoy will come back slowly.

What’s the biggest benefit of focusing on “The Most Likely Scenario”?

It prepares you for the worst so you’re not disappointed if “The Best Case Scenario” doesn’t work out. And, you can [exceed] your expectation if things actually turn out well.

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