As Canadians dealt with unprecedented levels of stress and anxiety during the heights of the COVID-19 pandemic, some turned to their financial advisors for extra support. In response, many advisors are seeking to enhance their training and knowledge around the emotional and mental health aspects of the advisory relationship.
Wendy Brookhouse, a financial advisor and money coach with Black Star Wealth in Halifax has always considered a client’s emotional mindset, as part of the financial planning process, but she says the effects of the pandemic emphasized the importance of implementing additional tools to assist clients with challenges in this area.
According to FP Canada’s 2020 Financial Stress Index, eight out of 10 Canadians said at least one aspect of their finances caused them stress last year. And almost half of survey participants said COVID-19 either significantly or somewhat impacted their level of financial stress.
While Ms. Brookhouse listened to and supported clients through their concerns as many moved into crisis mode last year, she took further measures to support their mental health, such as pivoting her communication to include contact numbers for mental health resources and incorporating financial psychology-related subjects into her newsletter. She also referred clients to appropriate professionals, such as a money mindset coach, in situations in which they would benefit from additional emotional support.
Industry-wide, Ms. Brookhouse, says she has also noticed a recent uptick in continuing education focusing on and offering resources related to client mental health and behavioural finance.
“I feel like there’s a recognition in the industry that I have not seen in years, that it is something that advisors and financial planners should be thinking about,” she says. “I’m seeing it more and more. I don’t feel as alone.”
Indeed, in 2020, Bridgehouse Asset Managers – which began researching and developing tools around the connection between mental health and financial decision-making in 2017 in partnership with the Canadian Mental Health Association – found that 92 per cent of advisors reported that a mental health issue had a negative impact on clients’ financial decision-making.
During the pandemic, several mental health challenges emerged for clients – most notably, anxiety, says Carol Lynde, Bridgehouse Asset Managers’ president and chief executive officer.
“Advisors described it as working in a trauma unit and all the things that clients needed help with seemed acute at that point in time,” she says, pointing to concerns about small businesses, market volatility, health, job loss and isolation.
Although client-advisor conversations were longer, Ms. Lynde says, meetings often did not lead to any portfolio changes. Instead, clients were seeking direction, comfort and confidence.
As a result, advisors are increasingly looking for training, education and accreditation around client mental health strategies, she says.
In addition to the tools and webcasts Bridgehouse Asset Managers has made available through its program, Ms. Lynde says she has spoken with several educational organizations about incorporating this type of training for advisors.
“We advocate the tools and the strategies – how to have a conversation, how to de-escalate a conversation that you’re having with a client who seems really upset about something, how do you help them become confident in their decision-making,” she says. “If we’re able to prevent people from getting off track on their long-term financial goals when they feel that stress or that mental health situation, that is a real key part to the advisor’s value proposition.”
The Financial Therapy Association (FTA), which is comprised of professionals dedicated to the integration of cognitive, emotional, behavioural, relational, and financial aspects of well-being, has recently seen increased demand for its discussion groups, webinars, and certified financial therapist designation program, says Natasha Knox, board member and business development chair at the FTA.
While interest in financial therapy was growing prior to the pandemic, Ms. Knox, founder and financial planner at Alaphia Financial Wellness in New Westminster, B.C., says the challenges clients have faced during the past year have accelerated advisors’ interest in developing skills and sharing knowledge in this area. As such, she says the FTA has further skills-building courses in development.
“We’re coming out with additional learning to meet the demand for bridging the gap between theory, which is the knowledge acquisition part of things, and the actual forming [of] the usable skills to be in a client-facing role,” she says.
Advisors’ changing roles is evident in a survey that Natixis Investment Managers conducted in 2020 as 53 per cent of financial professionals surveyed globally said they consider themselves more of a therapist by helping clients understand their relationship with money and the emotional drivers of investment decision-making.
Yet, advisors are trained very differently from mental health professionals. As such, Ms. Knox says many advisors are trying to come to grips with how far they want to go, in implementing these types of tools and skills into their practices.
“That is going to depend on the advisor, but also the particular regulatory environment people find themselves in. And depending on which organization they work for, that is going to, to a degree, determine what they can and cannot do,” she says.
The first step is for advisors to know the boundaries of their expertise and be aware of when a client may need to meet with another professional, Ms. Knox says. She points to different models being used, such as using of an in-house mental health practitioner, or a collaborative approach in which advisors can refer clients to a roster of professionals in a complementary discipline.
In other cases, clients benefit from the advisor improving their listening skills, helping them work through decisions and giving space.
“You can rely on some actual therapeutic techniques, but it’s a separate thing from just being a really great listener, being really open, being very approachable, and great to talk to. And for a lot of clients, that’s enough,” Ms. Knox says.