Top Financial Advisor Fails: Not Managing Daily Stress and Anxiety

Top Financial Advisor Fails: Not Managing Daily Stress and AnxietyEd Note: This article is part of an ongoing series focused on the mistakes made by financial advisors.

No one said managing other people’s money was an easy job. Making investors happy and being “on” day in and day out takes a toll on even the most accomplished financial advisor’s health.

Eating healthy and sticking to a regular workout routine keeps the mind and body sharp. If you are not healthy, it impacts the ones you employ, as well as the clients who trust you to stay on top of your game.

Dr. Alden Cass, a Manhattan, NY-based clinical psychologist and sales coach who specializes in treating financial advisors and helping them improve their on-the-job performance, says advisors are more prone to depression — both serious and mild — than the population at large. As a graduate student, Cass conducted a clinical survey on the mental health of Wall Street’s advisors. Published in 2001, the study, titled Casualties of Wall Street, examined nearly 50 reps and found that 23 percent of examinees exhibited significant signs of clinical depression, while another 36 percent showed mild to moderate symptoms. Interestingly, Cass says, “It also revealed that million-dollar producers were the most dysfunctional when it came to mental health, as they were most prone to burnout.”

In the book Bullish Thinking: The Advisor’s Guide to Surviving and Thriving on Wall Street, which Cass co-wrote with psychiatrist and financial journalist Brian F. Shaw, the authors wrote: “Brokers reported abusing alcohol and other substances such as cocaine, amphetamines, marijuana, Ritalin and Ecstasy. They also used sex as well as promiscuity to cope with their unrelenting stress.”

Higher the stress level is equated with lower productivity and poorer performance. If advisors feel stress and are doing nothing about it, they become emotionally and physically worn out. This affects mood, productivity, sales and the ability to prospect.

Successfully managing stress can be the key to having a competitive advantage in business. “Stress is a necessary part of our survival. Research suggests that we are continually bombarded by physical and emotional demands or stimuli in our world. Each of us has our own internal mechanism of realigning our body’s reaction to this stimuli and coping effectively. But when faced with an event or thought (called a stressor) that overwhelms our ability to maintain this equilibrium, it can result in a negative physical, emotional, cognitive and/or behavioral response,” wrote Dr. Denise Federer, psychologist, executive coach and founder of Federer Performance Management Group in Tampa, FL.  

“For example, if you are extremely concerned about the impact of the market decline on your clients’ portfolios, you may experience muscular tension, headaches, chest tightness, distractibility, anxiety, depression, angry outbursts or difficulty sleeping. This inability to manage our stress appropriately is what we call a “stress reaction,’” she wrote.

A coping response is anything you do that helps you deal with the stress in a way that provides relief. These coping responses can be either adaptive or maladaptive. The two most common maladaptive behaviors for people dealing with stress is to either nothing (avoidance behavior) and/or engage in irrational thinking.

“In approach-avoidance behavior, the further we get away from someone or something stressful, the calmer we feel. The tendency is to shut down and do nothing when the fear of making a mistake becomes overwhelming. During the last market turmoil, we witnessed both clients and advisors engaging in avoidance behavior in an attempt to escape the negative impact of this type of reaction.

“But ultimately, the anxiety builds up and  avoidance makes the situation worse. For example, you may avoid contacting a client you believe will be upset with you about decisions made concerning their account. Or, you call at a time hoping the client won’t be home and the answering machine will pick up instead. While initially you may feel relief avoiding a difficult conversation, eventually you will be distressed that you didn’t speak with the client and have the opportunity to resolve the situation.”

In her work with financial professionals, Federer recommends the following behavioral strategies to help in a stress management action plan:

Keep a Stress Management Log: Record the stressful situations you experience over a two-week period. Be sure to include your stressors, your stress reactions and your current coping responses.

Create behavioral strategies for managing your own stress: After recognizing circumstances that “set you off” and patterns in how you typically respond, the next step is to modify your current ineffective behavior and substitute  them with beneficial coping responses. Some suggestions are:

  • Limit outside negative influences (i.e. avoid watching “talking heads” and pessimistic people)
  • Continue recording stressful events and responses in a journal
  • Make a list of daily action steps
  • Listen to relaxation or meditation tapes before bedtime
  •  Exercise
  •  Make time for non-work interests and hobbies

Create governance rules for your business: Predictability, consistency and accountability are essential for ensuring client confidence. Take the initiative and create office policies that will help you manage your own work-related anxiety, along with client expectations. Steps to take include:

  • Creating a client communications calendar
  •  Improving responsiveness to client needs
  •  Creating a return call/email policy
  • Creating a client log identifying needed action steps

“The good news is that we can successfully modify our behavior and learn strategies going forward. The bad news is that making these necessary changes can be difficult. As a part of this process you likely will have to engage in new behaviors that initially might make you feel uncomfortable. Keep in mind that behavior is easier to change than feelings. However, taking action and getting out of your comfort zone is critical if you are going to see progress, learn productive coping responses and achieve the next level of success,” she wrote.

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