Personal Finance

Financial advisors are more stressed out than their investor clients, study finds

Paul Bradbury | OJO Images | Getty Images

Investing can be stressful.

Anyone holding stocks and bonds through the 2008 financial crisis knows that all too well. For the financial advisors who help investors navigate the investment markets, it’s no picnic, either.

A recent survey of investors and financial advisors by the Financial Planning Association along with Janus Henderson and Investopedia found that advisors were, in fact, even more stressed out than investors. When asked to evaluate the level of stress in their lives, 71% of advisors said they experience moderate (34%) or high negative stress (37%), compared to 63% of investors.

What’s more, advisor survey respondents feel their situation is getting worse. Twenty-eight percent of them said they were feeling higher stress than they did 12 months ago, and 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.

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“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, who was involved with the survey. “We don’t know for sure why, but stress levels are going up.”

Many of the 313 advisors surveyed know that negative stress is a problem for them. Only 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. When asked if they felt that reducing that stress would have a positive effect in their business or personal life, 84% somewhat or strongly agreed.

Despite the 10-year bull market in stocks, there are plenty of things for financial advisors to stress out about in the post-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 in Irvine, California, with his wife. “There’s more regulation, more need to keep current with credentials.

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“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. They also said that the most stressful challenges they face are maintaining a reasonable balance between work and life, at 65%, and building their business (56%).

“A huge driver of stress for advisors is uncertainty about their own financial situation,” Futterman said. “That uncertainty drives behavior.”

He suggests that advisors need to be as deliberate and methodical 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.”

Stress comes and goes. The stress doesn’t come from what happens to us but from how we think about it.

Janet Briaud

chief investment officer at Briaud Financial Advisors

The survey found a strong connection between negative stress and a failure to achieve goals. Much smaller proportions of “high-stress” advisors felt that they achieved their goals related to both their practices and their personal lives than “low-stress” advisors. When asked what factors prevented them from reaching their goals, the most frequently cited ones were poor time management, at 35%, and “my own mindset,” at 33%.

Stress is a subjective concept that depends largely on the person experiencing it. It can either motivate someone to tackle challenges and achieve goals or it can debilitate 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, in 1986. “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,” Briaud added. “The only thing we can do is our best in the moment.”

She credits discipline — in terms of getting enough sleep, exercising regularly and meditation — 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 advisors who feel overwhelmed by negative stress.

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.

Kimberly Bridges

director of financial planning for BOK Financial

“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, and a board member of the Financial Planning Association. “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. 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.”

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