Very early in my clinical psychology training, I received some powerful advice from a professor about the role of caring and the importance of clear boundaries in professional relationships. He said, “If you don’t care about your clients, you can’t help them. But if you care too much, you can’t help them.” As we work with advisors during the COVID-19 crisis and face the challenge of the economic recovery process, it’s critical for financial advisors to understand this delicate balancing act. To stay healthy and engaged with all of your clients, you need to care enough about each of them—but not too much.
Three decades of experience have revealed that the vast majority of advisors get into this business and stay in it because they want to help their clients. In normal markets, advisors can find it challenging to manage the number of human interactions that are necessary to successfully run a business. During volatile times and economic displacement, the needs of clients can be overwhelming. This is where my professor’s advice about caring becomes so important.
All of the investors you work with face two challenges during difficult times. First, they must embrace and metabolize strong negative emotions. One of behavioral finance’s greatest contributions to understanding investor behavior is the discovery that humans have a built-in feeling of loss aversion that triggers intensely bad feelings. During turbulent economic cycles, every investor feels badly about losses, and some feel terrible simply about a lack of gains. For some, that pain is immense, and many have a hard time remaining calm.
The second challenge is that to accumulate wealth, every investor must take deliberate actions in the near term and wait for the accumulation of results over the long term. Patience and self-discipline are required for success. Many ultrawealthy people worked hard and waited patiently to achieve their riches. Others delayed instant gratification and saved, thereby accumulating assets over time. Success requires practicing discipline, avoiding impulsivity and making thoughtful decisions. This type of self-control can be painful.
When a client has difficulty managing emotions and making disciplined decisions, an advisor can get caught in a painful bind. Some clients may violate their financial plan by either overspending or undersaving. Others may have strong negative feelings and blame their advisor with words like, “I feel terrible about this and it’s all your fault!” These interactions are toxic to your well-being and need to be managed intentionally so that you can engage with other clients and help those who can use your support and advice.