Assisting Clients With Financial Stress
When an investor walks into their financial planner’s office, they’re not only bringing financial questions, but also, whether outwardly expressed or not, they’re likely bringing stress or anxiety with them. It’s among the reasons that in my program we focus on both what I call the “people work” of helping a client through a stressful or otherwise emotional issue, as well as plotting their financial path forward. Whether financial advisors want to be—or planned to be—helping a person through emotional situations, they’re doing it each time they give financial advice.
Being aware of this is crucial, as ignoring the emotional and human elements underlying a person’s financial situation will be detrimental to the client.
It’s also vital that advisors recognize their own stress levels as they enter into client meetings, because if they’re projecting a great deal of stress, that’s being added to the investor’s stress.
All of this underscores the importance of advisors recognizing what financial stress is and deciding how they’d like to handle it. And for that to happen, we need an accurate definition of financial stress, as although many people, companies, and reporters use the phrase “financial stress” with great frequency, they may be mislabeling other financial feelings.
Financial Stress Causes
There are numerous financial stressors in life, some of which are positive, such as receiving an inheritance, and many more that are negative, including losing a job, going through a divorce, or estate planning.
With that, financial stress is a person’s reaction to the stressor, which can manifest as irritability, sadness, and trouble sleeping, among other symptoms.
Financial stress can be treated by targeting the stressor itself. In the case of inheritance, a path to resolving it would involve creating a financial plan to effectively utilize the inheritance and ensure that it encompasses any tax implications, which can be particularly stressful for a person as they don’t know what to expect. If the client is losing sleep or has trouble focusing because of the stressor, general stress management techniques can be used, including deep breathing and meditation. These techniques can help a person focus on the present rather than their stressor, even if only momentarily.
When treating someone with financial stress, even if the financial planner has already helped the client address the stressor, empathy and care for the client still needs to be felt as it takes time to heal from financial stress.
Financial professionals must recognize that prolonged financial stress can lead to financial anxiety, which is a different, albeit related condition, and needs to be addressed as such.
But I’m a Planner, Not a Therapist
Financial stress is one of the most common issues clients face. In fact, according to the American Psychological Association’s Stress in America survey, financial stress is consistently one of the top stressors year after year.
Financial planners often find themselves saying, “I feel like a therapist, but I’m not.” The most powerful tool planners have is themselves when it comes to dealing with anything emotional. First, connecting to clients as humans, offering empathy, support, and even a tissue when needed. These are not acts of mental health therapists; these are essential skills of any helping professional, including financial planners.
While financial stressors can often be tackled with financial tools, such as saving more in preparation for losing a job, the behavioral (i.e., thinking, feeling, and doing) aspects of financial stressors can be more difficult to deal with. Clients don’t always do what they “should” because changing behavior is hard. If financial planners have the appropriate training, they can lean into these behavioral skills. If it is beyond the scope of their training and experience, then it may be prudent to collaborate with another professional. Just like a planner would have estate attorneys, tax accountants, and insurance providers as part of their referral resources, having financial therapists or relational and mental health experts (i.e., marriage and family therapists, psychologists, clinical social workers, etc.) is equally important. This group of professionals can help with stress management and navigating difficult conversations with couples and families that may quickly spiral when finances are involved. Keep in mind that most mental health professionals have little to no training in money-related issues; working together with the client’s best interest in mind may be the best approach.