Financial Advisors Are More Stressed Out Than Their Clients

Investing can be full of stress. Anyone holding stocks and bonds through the 2008 financial crisis knows that all too well, Andrew Osterland writes on CNBC.

For advisors who help investors navigate the investment markets, it's no easier.

A survey of investors and financial advisors by the Financial Planning Association together with Janus Henderson and Investopedia found that financial advisors were even more stressed out than investors.

71% of advisors said they experience moderate or high negative stress, compared to 63% of investors.

The survey respondents feel their situation is getting worse.

28% of said they were feeling higher stress than they did 12 months ago. 44% are feeling more stress than they did five years ago.

The numbers are significantly lower for investors, 34% of whom said they are more stressed now than five years ago.

"The big headline from this survey is that both investors and advisors are feeling more stress," said Michael Futterman, head of Knowledge Labs Professional Development at Janus Henderson.

"We don't know for sure why, but stress levels are going up."

Most of the 313 financial advisors surveyed know that negative stress is a problem for them. 10% of those advisors self-identified as "high stress" felt comfortable with the level of stress in their life, compared to 64% of "low-stress" advisors.

There are plenty of things for advisors to stress out about in the post-2008 financial crisis environment.

"We have a number of walls moving in on us," said Mark Robertson, who runs a small registered investment advisor firm, Maxim Capital Advisors with his wife.

"There's more regulation, more need to keep current with credentials.

"There's fee compression, shrinking margins, and increasing competition."

A very big source of anxiety for independent RIAs is the health and outlook of their businesses.

When asked how satisfied they were with a variety of aspects of their lives, only 18% were very satisfied with the profitability of their business and 15% with its growth trajectory.  

"A huge driver of stress for advisors is uncertainty about their own financial situation," Futterman said.

"That uncertainty drives behavior."

Futterman proposes that financial advisors need to be as calculated about building their businesses as they are in helping clients with financial planning.

"People tend to be reactive in this business," he said. "Most advisors build their practices willy-nilly, accumulating assets and running the risk of taking on work that they don't want." 

The survey found a strong connection between negative stress and a failure to achieve goals. 

Stress is a subjective concept that depends largely on the person experiencing it.

Stress can motivate someone to confront challenges and achieve goals or it can weaken them and be a source of negative anxiety.

"Stress comes and goes," said Janet Briaud, chief investment officer and partner at Briaud Financial Advisors, an RIA firm she founded in College Station, Texas.

"You can lose a parent; you can lose a client; your children may disappoint you or somebody just says something nasty to you."

"The stress doesn't come from what happens to us but from how we think about it," she added.

Briaud doesn't think the advisory industry fosters any more negative stress than other walks of life. "Everybody feels enormous stress," she said.

"It's about how you react to it.

"People get so worried about the past or the future that they don't live in the present," added Briaud.

"The only thing we can do is our best at the moment."

She credits discipline with helping her to keep a positive mental outlook.

She calls it "mindfulness."

"When my mind gets hooked on an idea like my firm isn't big enough, I can cut off the thinking process because I see it," she explained.

There is no one solution for financial advisors who feel swamped by negative stress.

"People have to find solutions that work for them," said Kimberly Bridges, senior vice president and director of financial planning for BOK Financial in Scottsdale, Arizona.

"They need to retrain their brains and take control of their responses to stop stress from being negative."

The last 12 months have objectively been a very "stressful" time for Bridges, as she changed jobs, moved, bought and sold a house and created a new financial planning offering from scratch for BOK Financial.

"I've had a lot of things going on, but I've looked at it all as positive stress and something that motivates me to take on new challenges."

Popular

More Articles

Popular