A big part of a financial advisor’s job is to be a release valve for their clients’ financial anxieties… it’s an essential aspect of how we add value in helping them manage their “behavior gap” and avoid making poor financial decisions for themselves. Because unfortunately, no matter how well we prepare our clients conceptually about the importance of keeping an even keel during the inevitable bouts of market volatility (or worse), the concept of “market risk” (and how clients will react to it) often feels purely theoretical until it actually happens… or as Mike Tyson so eloquently put it, “Everyone has a plan until they get punched in the mouth.”
And when market turmoil happens, it creates a huge amount of stress for clients, who oftentimes will then turn towards their advisors as they look for someone to blame. But while that can serve as the foundation for memorable “war stories” that advisors can bond over at industry events, the dynamic that isn’t discussed nearly as much is mental and emotional toll we as advisors face ourselves in serving our clients during severe market corrections or even deep bear markets. In fact, in the aftermath of the financial crisis, one study found that advisors ended out experiencing symptoms also associated with post-traumatic stress disorder! Which, in turn, raises the question: How can advisors prepare themselves mentally and emotionally to help not only their clients, but also themselves, cope with the stresses inherent in serving clients through their own times of stress?
In our sixth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss proactive steps advisors can take to prepare themselves to deal with and manage the stresses inherent in being a financial planning professional, some common but less-well-known sources of advisor stress, and how a subtle shift in mindset can help advisors make self-care a priority.
As a starting point, the best way to put yourself in a place where you’re able to deal effectively with the inevitability of stress is self-care, which only gets more important as we age and includes (among other things) diet, exercise, and rest (both physical and mental). Meanwhile, as an “accountability partner” who’s there to support and guide clients towards reaching their goals, you also need to have a support system that you can reach out to when things get tough, including family, colleagues, a mentor, and other industry peers. Because, just as your clients need someone they can vent to when it seems like everything is falling apart around them, you also need to have a group of folks you can turn to when you need to express your frustrations and anxiety. It also may mean allocating a part of your personal budget towards hiring your own “accountability partners” to help you stay (get?) fit, eat right, and establish a healthy work-life balance… which will almost certainly end out providing a positive ROI for you both personally and professionally.
Ultimately, the key point is simply to realize that as a skilled financial advisor, you are still no good to your family, friends, and colleagues if you’re stressed and unhealthy yourself, and you certainly won’t be able to provide the level of service that your clients expect… and deserve. And in order to do that, perhaps a smart approach might be to stop treating things like rest and recreation as a “reward” for working hard, and instead start thinking about those things as a prerequisite (that needs to be actively scheduled for on your calendar) for doing good work in the first place!