Advisers need to prioritise mental health of themselves and their clients: expert
Financial advisers need to understand the mental health of their clients as well as themselves while economic uncertainty grows, warned a leading industry figure.
Bryn Evans, private wealth adviser at Integro, told SMSF Adviser that over the past 12 months, many advisers grappled not only with addressing rising interest rates and inflation in delivering optimal client advice but also with supporting their mental health.
“We have seen that there is also a need for advisers to have a strong understanding of the emotional impact that the economic conditions are having on clients,” Mr Evans said.
“From our own experience, we are finding that clients across the income spectrum are lacking confidence, and feel they are not competent in making financial decisions, and advisers must understand their situations and work through their psychology around money.”
Mr Evans said many clients are concerned about their retirement savings and are anxious about how they will manage given their fixed costs are rising.
“Clients are coming to us with fixed costs that are 80 per cent or higher of their after-tax income,” he said.
“It’s important advisers understand this and find ways to have a conversation around their clients’ feelings about money moving forward and the best way to secure their future, which can often be a long process.”
He said the rapid rise in interest rates has changed financial circumstances for clients and that it can be challenging for them to acknowledge that they may no longer sustain various fixed costs such as housing or education.
“Advisers need to use modelling to help their clients make appropriate choices, and prioritise their needs,” he said.
These “hard conversations” can, however, impact the mental health of advisers. As such Mr Evans said professionals in the sector also need to prioritise their own well-being.
“Advisers also need to look after their own ‘bandwidth’, and after meetings with clients, take time out to decompress,” he said.
“If you have had a challenging conversation with a client about their concerns and how it impacts their retirement savings it is important to understand it is part of your role to guide clients through this situation, but you need to look after yourself and your mental health.”
Increase in advisers seeking support
Peta Slocombe, founder and CEO of Performance Story, an independent firm that works with larger corporate firms and executives on coaching and mental health support, said there has been an increase in advisers and executives seeking support.
“We are seeing a lot of people who have not been in this situation before of having to have hard financial discussions,” she said.
“Advisers are dealing with financial distress and they are increasingly having conversations with clients that are hard.”
Ms Slocombe said financial planners and wealth managers are being increasingly exposed to people under stress and demanding more results.
“The general mental health and wellbeing of the sector has not bounced back since Covid so advisers have had a sustained period of time of people looking to them to solve their problems,” she said.
She said it’s important that advisers implement strategies to support clients and themselves to navigate the psychological demands under which they are now working.
“These can include things such as increasing protocols around listening and understanding goals, and dealing with change,” she said.
“Clients with increased anxiety and distress will have different goals about their life plans. Advisers should understand that their role now is not just about numbers but also about the human effect that their decisions can have on clients with high anxiety and uncertainty.”
