Financial anxiety – How to spot it and help to reassure your clients

By AdviceBridge

Last month, UK inflation soared to 9% in April 2022 – its highest level for more than 40 years.

As the rising cost of gas and electricity, along with escalating food and transport costs, continue to fuel the cost of living crisis, millions of UK households are feeling the crunch.

And, of course, many financial advisers have clients who are also suffering the effects of rising costs.

Indeed, a recent US survey revealed that 71% of financial planning clients reported experiencing financial anxiety at least half the time. The worrying part, for financial advisers and planners, is that only 49% of planners thought financial anxiety was affecting their clients.

This disconnect reveals that although money is a daily subject of conversation for planners, for clients it’s often still pretty taboo.

The crucial difference between financial stress and financial anxiety

People experience financial stress when they have too little money.

Crucially, people who experience financial anxiety often have money, a job, and all the usual hallmarks of security, but still worry that something bad is going to happen.

Because they have all the trappings of “wealth” it can be much more difficult to spot when someone is suffering with financial anxiety.

For many people, carrying the constant weight of anxiety could be worse than a negative event actually happening. And, sometimes, being given an opportunity to articulate their concerns around money might help alleviate some of the worry.

3 tell-tale signs to watch out for

Focusing on the negative

A client prone to financial anxiety will often allocate more attention to negative information.

When presented with a choice of information that gives an optimistic interpretation of events or data that paints a bleak future, a financially anxious client will focus on the threatening version.

If it’s not clear, it must be bad

Anxious clients will also process alternative viewpoints or complex issues differently.

Unfortunately, even when the economy is thriving, the media seem to delight in finding a reason why the good times won’t continue.

As things stand today, with inflation climbing and the cost of living crisis gaining momentum every day, headlines are full of doom and gloom, which will only serve to fuel further anxiety.

Risk aversion

A client full of anxiety will do everything they can to mitigate risk, to the extent that it could be detrimental for their future plans.

They will question possible investment strategies with expectations that are based on fears, rather than financial goals or future life plans.

Instead of asking, “How do we grow it?”, they’ll say, “Just don’t lose it!”

5 ways to reassure clients and help them manage their anxiety

1. Discuss current events and family dynamics

Engaging your client in casual small talk about current events and family news is all part of the job, but more than maintaining a strong relationship, it also gives you some understanding of how well your client is coping with market anxiety. This relaxed conversation may reveal how much anxiety they are feeling in other areas of their life and is the perfect opportunity to offer support and guidance, and show that you care.

2. Focus on the positive

Help clients see positive signs, while not ignoring their concern or discomfort. Rather than explaining an over-optimistic viewpoint that may be perceived as condescending or unrealistic, explain how one piece of data doesn’t make a trend, in the same way that one industry doesn’t shape an entire economy.

3. Encourage clients to limit their news consumption

The 24-hour news cycle makes it easy for clients to become discouraged and lose sight of their long-term financial goals. The constant stream of daily market news and commentary can challenge your client’s investment discipline.

It’s wise advice for us all to keep internet use to a minimum and rely on trusted sources of information. Both of which can lessen the risk of triggering anxiety.

4. Provide informed insights about past and future patterns

Provide information that tempers negative stories or data and helps clients see trends or think long term. Show how past cycles or events eventually came to a positive conclusion. Make the case for a diversified portfolio consisting of stocks combined with asset classes that may be seen as less volatile (fixed interest) and less subject to global shifts (commodities).

5. Engage and educate

A large part of your role is the time you spend educating clients. While it’s obviously necessary to explain the products you are recommending, it’s equally important to discuss the changing economic environment and its possible impact on current investments and long-term plans.

Don’t settle on only providing more information, provide clarity by imparting information in small, easy-to-digest increments. You could, for example, direct clients to interactive websites, videos, short documents, or creative multimedia sources to educate clients about managing their wealth.

Better still, give them a tool that allows them to see how their financial plans are playing out, which is where AdviceBridge can help.

How AdviceBridge can help

The AdviceBridge platform flags the activity of clients to the adviser, helping to spot specific concerns and anxiety enabling advisers to step in at any point with reassurance.

It enables you to share a vision of a retirement financial plan and engages clients with its simple and meaningful interface.

The AdviceBridge app provides clients a single figure showing what clients are likely to receive on a monthly basis in retirement, enabling them to see long term rather than short-term dips.

Your client can use the tool to highlight how altering their finances will affect their financial situation.

Illustrating how the change can influence the money they have available to spend, now and in retirement, can help increase awareness of how small changes can create big differences.

If there’s a need to save more to afford the retirement your client is hoping for, you can use the tool to show this and help them understand the gap they need to fill.

Using a visual interface can help increase awareness of a client’s financial situation and highlight the impact small changes can make over the long term.

Find out more about our service and how we can help reassure financially anxious clients by emailing us at hello@advicebridge.com, booking a demo, or calling 0203 925 3850.