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.
Here are some ways to establish proper emotional boundaries and better care for yourself.
Pay Attention to How You Feel When Talking with Clients
When clients are responsibly managing their own emotions, they are curious and possess a positive energy. Conversations are straightforward with a healthy sharing of ideas and very few emotions. With other clients, you may begin to feel anxious or have a growing concern that the client might not be okay. When you feel this, you’ll notice that the conversation shifts from providing quality advice to feeling like you’re taking care of the other person.
A good practice is to follow the “three fingers rule” of managing your emotional activation. When you’re having a thoughtful conversation, your muscle tone will be relaxed, your breathing will be deep and slow, and you can sit back comfortably in your chair. When you find yourself breathing faster and feeling tight in your chest, and especially when you lean forward with a gap between your back and the back of the chair that’s three fingers wide or more, you’re becoming activated emotionally. This is a good time to remind yourself that your job is to provide advice to your clients and not to do things for your clients.
Focus on the Quality of Your Advice and Not Your Clients’ Actions
The personal trainer owes the client an effective workout program; the doctor owes the patient an accurate diagnosis and treatment protocol; an advisor owes the client her best thinking and advice on financial matters. The professional does not do the work for the client. The athlete must exercise, the patient must adhere to the treatment plan and the investor must follow the financial plan.
If you present a sophisticated point of view about the markets and a thorough Standard of Care of advice, what the client does isn’t your decision. Just be sure you’ve been clear about your recommendations and have articulated the consequences of her decisions. After that, it’s up to the client. (For more information about developing your professional Standard of Care, see the AllianceBernstein Advisor Institute’s program A Higher Standard of Care.)
Remember That You’re a Resource; You’re Not Responsible for Saving Clients from Themselves
The task of investing isn’t natural for humans. We experience pain when investments lose value or didn’t gain as much as we had hoped. Some people are better than others at managing their pain and reactivity. Importantly, in all cases, the pain of investing is the client’s problem and not something from which you can rescue him.
The prudent advisor focuses on the quality of her knowledge, the act of sharing her skills with clients and her commitment to having the courage to advise even when that advice is not pleasant. Paradoxically, knowing the limits of your responsibility will help you stay more fully engaged with everyone you work with and will protect you from the toxic influence of clients who aren’t as capable of managing their own emotions.
For more resources from the AB Advisor Institute visit http://alliancebernstein.com/go/abai.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.