In today’s digital-age culture where nearly all sources of news and media are instantly accessible and information overload is a normal state of being, it is not surprising that stress and anxiety are very commonly experienced in our fast-paced society. And in fact, stress and anxiety about specific financial problems are what most often drive people to seek the help of an advisor in the first place! Which, in turn, means that advisors should have some strategies in their toolbelts to effectively help clients (prospective or otherwise) who might be stressed and anxious. Accordingly, the first step is understanding that, while the terms “stress” and “anxiety” are often used interchangeably, the reality is that they are two very different things, indeed, and require different approaches.
While stress is the result of external stimuli perceived to pose some level of threat (with a corresponding response to the threat that may involve uncertainty about one’s own ability to deal with the issue at hand), anxiety results from internal forces arising from unhealthy attitudes towards a particular idea or concept. Thus, while stress can be eliminated when the external stimuli are removed, the same is not necessarily true for anxiety. While an external stimulus might serve to trigger anxiety, removing it may have no effect on the anxiety since it is the internalized idea that causes the anxiety (versus the actual external trigger).
A recent study released by the FINRA Foundation examined specific differences between individuals reporting financial stress and financial anxiety and found that 44% of all respondents reported experiencing financial stress. Other results provided by the study showed stress levels varied by sex, income level, age group, healthcare concerns, presence of dependents, and retirement status. More detail on these differences can be found in the following figures.
Interestingly, financial anxiety is consistently higher than financial stress across a variety of demographic groups, roughly 10 percent higher. This might be justified by the very definitions of stress and anxiety, whereas stress can be addressed by removing the stimuli acting as the stressor, anxiety will linger as psychological damage even in the absence of whatever stressor might be the initial root of the anxiety.
And while stress and anxiety may appear very similar, the underlying causes are distinct and communication styles to deal with each condition should be adjusted accordingly. For instance, advisors who have clients experiencing stress can most effectively help them by reframing the stressful issue positively (such as by reminding how they’ve successfully overcome similar challenges in the past), focusing on the problem (discussing the specific problem and plan of attack), and making to-do lists for the client. On the other hand, clients with anxiety may be overwhelmed by these strategies. Accordingly, advisors can use a different set of techniques, such as providing a safe place to have conversations about money issues, offering guidance as a teacher and supporter, and recognizing and acknowledging growth and progress. And while stress and anxiety may appear to have similar symptoms on the surface, simple assessment tools can help the advisor assess whether their clients are experiencing stress or anxiety so that communication strategies can be adapted accordingly.
Ultimately, the key point is that while stress and anxiety affect many individuals, financial advisors can best help their clients by having mechanisms in place to help them identify any stress and anxiety they may be experiencing. Additionally, taking care of themselves and managing their own stress and anxiety issues is something else advisors must do; otherwise they run the risk of unintentionally transferring their own emotions onto the client.