Addressing Financial Advisor Anxiety To Help Prospects Overcome Their Fear Of Judgment

Financial Advisor Anxiety (FAA) Involves Fears Of Sharing Information And Being Judged On Past Behaviors

Many financial advisors have clients who view working with a financial planner as a completely normal, easy, and rewarding process. However, while many clients may trust and enjoy working with their advisors, there are other individuals who have never worked with a financial advisor and experience a high degree of anxiety about doing so. For these individuals, the idea of sharing personal financial information and behaviors with a complete stranger – and being judged by them based on those details – can lead to enough anxiety that prevents an initial phone call to the planner from ever happening.

Paul Gerrans, Professor of Finance, and Dough Hershey, Professor of Psychology, conducted a research study in 2016 to explore how Financial Advisor Anxiety (FAA) impacted an individual's proclivity to seek out professional financial advice. In order to assess Financial Advisor Anxiety (FAA), Gerrans & Hershey evaluated the attitudes of study participants in response to the 11 statements below that expressed reasons for experiencing anxiety about seeing an advisor:

1. I (would) find it difficult to ask a financial professional to explain something again, repeat themselves, or use words that I can easily understand.
2. I (would) worry that financial professionals would think I’m silly if I come into their office with a minor financial concern.
3. I (would) find that a financial professional would criticize me for not saving all of the receipts I should.
4. I’m embarrassed I haven’t made more of an effort to keep careful financial records.
5. Describing to a financial professional how I spend money on frivolous or unnecessary items is (would be) exceptionally embarrassing for me.
6. I (would) worry that a financial professional would criticize me for some of the unwise spending and savings decisions that I have made.
7. If I have financial difficulties I tend to hide this fact from others, even close people, because I am (would be) embarrassed.
8. I am (would be) embarrassed by the fact that I have allowed my financial situation to deteriorate to the point it has.
9. The thought that a financial professional might ask me for detailed transaction information and receipts is humiliating for me.
10. I would be hesitant to show my private financial records to a financial professional.
11. I am generally uncomfortable talking about personal financial matters with others.

Each of the statements focused either on the primary concern of actually disclosing their personal financial details (e.g., "I would be hesitant to show my private financial records to a financial professional") or being evaluated based on their current or past behaviors (e.g., "I worry that a financial professional would criticize me for some of the unwise spending and savings decisions I have made").

The questions were modeled after those used in a similar survey to assess consumer anxiety related to healthcare, where, similar to the FAA study, questions were designed to assess two distinct concerns: 1) fear of disclosing personal information (e.g., details about their body and what currently ails them – "Will the doctor think I'm repulsive?"), and 2) fear of being evaluated based on their current or past behaviors (e.g., "Will the doctor think I've been irresponsible or lazy?").

Interestingly, while patients who had anxiety over seeing a doctor had two separable fears related to either disclosure of information or evaluation based on their personal habits, individuals who had anxiety over meeting with a financial advisor did not illustrate two separate fears. Instead, their anxiety appeared to synthesize both disclosure and evaluation into a single fear. This phenomenon suggests that, because the combined fear of disclosure and evaluation tends to arise together for individuals with FAA, especially for those who may never have met with a financial advisor before, the resulting anxiety can be especially overwhelming.

Importantly, the study by Gerrans & Hershey presents FAA as its own statistically significant factor that prevents individuals from getting professional financial help – the research also illustrates that different groups of people tend to have different levels of FAA and, in turn, are then more or less impacted by FAA.

For example, an important finding of the study was that the number one fear of consumers – regardless of age, gender, and other demographics – was unfamiliarity with financial planning terminology. Unfortunately, this means that many individuals never reach out to financial planners because they worry about their own lack of knowledge about financial planning and fear having to ask the advisor to explain a financial concept more simply. Not knowing a financial term and feeling shame or anxiety about that is, surprisingly, a very strong deterrent that keeps many individuals from seeking much-needed help from an advisor, even if they may be brilliant in other areas of knowledge.

The study also presented the interesting possibility that men and women each hold different central fears around the idea of meeting with financial advisors. While women in the study tended to have the most anxiety around unfamiliar terminology, men tended to worry more about the advisor judging their past behavior or lack of organizational skills. While these differences were not identified as statistically significant, they were nonetheless notable differences that raise the question of how such concerns may impact a financial advisor's business.

For instance, women are more likely than males to have a financial advisor – might this relate to the suggestion that women don't fear the judgment of their past behavior or lack of organization as much as men do? Perhaps while some women might feel anxious about not understanding financial terminology, they aren't bothered so much about being judged on their behavior.

For some men, on the other hand, perhaps discussing financial concepts with an advisor is less intimidating, but they may be uncomfortable with disclosing their personal financial information (even though they are the ones that reached out to the advisor for help in the first place!). This might help explain the occasional prospect who reaches out for an answer to a question but who is very reticent about engaging in the actual process of financial planning.

For example, prospects who were between the ages of 40 – 49 had higher anxiety than those who were age 50 and older. Which suggests that getting younger prospects (at least, according to the study, those between ages 40 – 49) to see a financial advisor might take more work than it would an older prospect. And while seeing a financial advisor at age 50 can obviously provide value for a client, how much more valuable might financial planning be for a prospect who chose to meet with an advisor much earlier?

As financial advicers, we don't want to simply accept the status quo by targeting clients who are already planning for retirement just because we believe they're less likely to be struggling with FAA (and presumably it would be easier to convince them to come see us). Instead, advisors can aspire to do better by helping younger prospects overcome their anxiety, which can make a huge difference for them with respect to helping them achieve their long-term financial goals, not to mention how advisors themselves benefit by establishing what can end out to be meaningful, rewarding, and long-term client relationships!

Individuals With Financial Advisor Anxiety (FAA) Avoid Seeking Help From Professional Advisors

Individuals with Financial Advisor Anxiety (FAA) may feel that the best way to deal with their fear is simply to avoid meeting with an advisor in the first place – regardless of the fact that working with an advisor could be very helpful for them. This tendency to avoid professional financial advice out of fear of judgment is not surprising, as a number of reports have analyzed the very question of why individuals avoid seeking professional financial advice. Some have cited reasons including an individual's own misconceptions (e.g., financial planning is too expensive, it's only important for the wealthy, or older individuals are the only ones to benefit), but oftentimes, these reasons are ultimately used as excuses to avoid having to face their deeper fears.

Because for someone with FAA to actually meet with a financial planner, even if they know they need help, the experience can feel so uncomfortable and negatively judgmental for them that the shame and vulnerability are overwhelming enough to deter them from ever considering a follow-up meeting or even a first meeting with a different advisor.

Importantly, FAA does not necessarily arise from past experiences with financial advisors, as friends, family, and acquaintances can be judgmental of one's financial decisions. In fact, just about all humans – including financial advisors! – have been socialized to believe that they are judged by their relationship with money.

With this in mind, the research team at Kitces.com is currently working on a project to develop new education for the platform by examining the comfort level around asking and answering personal financial questions. Two of the questions included in the study ask financial advisors the following:

1. On a scale of 1 to 10, where 10 is being totally comfortable, how comfortable are you asking financial questions of others?
2. On a scale of 1 to 10, where 10 is being totally comfortable, how comfortable are you answering financial questions about your own situation?

Many financial planners tend to answer the first question with an 8, 9, or 10, but answer the second with a much lower number, such as 3, 4, or 5. Basically, even financial advisors who know the importance and benefits of discussing financial planning do not want to have these discussions about their own situations! These are hard discussions to have, as judgment is real and is uncomfortable for most people.

Importantly, while there is little that a financial advisor can proactively do to change some of the inescapable concerns that individuals have about meeting with a financial advisor (e.g., they think they're too young or not wealthy enough), FAA is a much more malleable and subjective worry, and advisors can certainly help lessen its effects on many of the prospects who are afraid to reach out!

How To Lessen Financial Advisor Anxiety (FAA) By Defining Financial Terms And Normalizing Fears

For financial advisors who want to help alleviate the impact of Financial Advisor Anxiety (FAA), some less-commonly used tactics can be helpful to encourage nervous prospects to set meetings, as well as to help advisors enhance their rapport-building process.

One of the most common fears associated with FAA involves financial literacy. The idea of an advisor using financial jargon can elicit high levels of fear and anxiety in prospects and clients, especially when they expect to be negatively judged because of their lack of knowledge. Expecting to feel dumb because they won't understand their advisor's recommendations or the features of a financial product being offered is often the reason prospects and clients do not want to ask the advisor to explain or repeat themselves. And again, for many individuals with FAA, these fears are often the reason they never even reach out to an advisor in the first place.

Another important consideration for advisors is what they can do to support prospects with FAA who finally do manage to come to terms with their anxiety and reach out for help. However, what often happens simply serves to exacerbate the prospect's FAA – the advisor will thank them for reaching out, ask them personal financial questions, maybe ask them to fill out paperwork… essentially getting financially naked before ever building a strong rapport. The financial planning process generally does nothing to reward a prospect for the bravery they need in order to take the initiative and reach out. Instead, it just reminds the prospect of why they were so anxious about reaching out in the first place, embarrassed about having to discuss their past financial decisions and record-keeping habits!

Thus, advisors can play a big role in helping prospects successfully deal with FAA by helping to educate them before they even reach out (because the advisor won't have an opportunity to educate the prospect while they are together in a meeting if the prospect is too afraid to set a meeting in the first place!).

The following suggestions are a few ways advisors can update their firm's website to encourage prospects to reach out by helping them get familiar with important financial planning terms, along with the firm's processes:

1. Include a glossary of terms. Go through the firm's website and note any financial terms or concepts listed (e.g., IRA, 529 plan, financial ratio, fiduciary, Modern Portfolio Theory). Make a note of all these terms and then create a glossary, hyperlinking each term throughout the website back to its glossary entry on the glossary page.
2. Offer a recommended reading list. There are many great financial planning books that can help prospects not only learn about the principles of financial planning but also about financial anxiety. There are even books that can orient prospects to the advisor's practice. For example, financial advisors who follow George Kinder's Financial Life Planner approach might suggest his book, Lighting The Torch – The Kinder Method of Life Planning. How great would it be if a prospect found a book on the advisor's site, read it, and decided to set up a meeting? Additionally, the advisor now has a book in common with the prospect, which they can use to break the ice and build rapport!
3. Create a downloadable resource about the firm's process. Telling clients what to expect at their first meeting can be a good way to normalize the fear of being judged. By talking about knowing what it feels like to be judged, an advisor can convincingly reassure clients that they'll do their best not to create any anxiety for them during the meeting. Suggesting how clients can prepare for their first meeting can also help to alleviate anxiety, as can discussing common questions and fears.

Another idea for advisors to build trust with potential clients they’ve never met is to make a recorded video for them and to get a little vulnerable in the process themselves. Prospects who may be afraid of calling and feeling judged may find some reassurance from the opportunity to virtually 'meet' the advisor through a video. Here are some ideas an advisor can discuss in such a video introduction:

1. Fears. The advisor can describe how it felt scary, odd, or loathsome to get financially organized for the first time themselves. Include a discussion of how much better it feels now, and how the effort it took to be brave, in spite of the fear, was worth the peace and clarity resulting from having done that work.
2. The things they didn't know. Talk about the learning process and how prospects and clients can be learners, too. No one ever becomes a master without first being a beginner.
3. The process. Let prospects know what to expect during the first year of an engagement. Advisors can share what they love most about helping clients and their favorite ways to help them, offering an example or two of what will happen during the year to set expectations and to normalize feelings of anxiety.

Last but not least, advisors can get out of the office (or house) and find opportunities where they can model nonjudgmental behavior. Prospective clients may suspect that they are being judged by ordinary everyday people, and they may fear that their advisor (if they ever take the leap and meet with one!) is going to do it, too. And showing them that this won't be the case out in the open is getting easier, as the world is slowly starting to open back up and is (thankfully) becoming safe again to venture out in public.

Advisors can spend time getting involved in their community by volunteering, attending events, and organizing functions (not necessarily related to financial planning) that simply allow people to get to know the advisor and, at the same time, find out what they do without fear of being judged. Creating an environment for individuals with FAA where they can comfortably learn about an advisor’s role through spontaneous, unscripted conversations – because someone with FAA would probably never show up to a planned meeting in the first place! – gives the advisor a chance to showcase their genuine desire to work with clients without judgment, and at the same time, hopefully also to alleviate their fear, potentially opening them up to future conversations.

For example, one easy way to build trust with anxious prospects through spontaneous encounters is to substitute the traditional elevator speech with casual conversation. Instead of fervently trying to convince an individual to set up a meeting because of how great the firm's services are, an advisor might connect better by simply talking about a common question that many clients have asked and some of the ways that question is addressed. This tends to normalize asking questions about financial planning, similar to what an advisor might do when creating an introductory video, and allows the advisor to talk about how their process works and the kind, caring, and non-judgmental treatment that the client can expect.

Tim, a financial advisor, is at his local watering hole enjoying a festive beverage while watching a football game. Donnovan, another patron, sits down next to Tim and the two begin to discuss the game. As they get to know one another, they have a very casual introductory dialogue...

Tim: Well, I am a financial advisor.

Donnovan: Oh, wow. That is like stocks and stuff...got any good tips?

Tim: Yes, investments and portfolio management are a part of financial planning. We also talk about taxes...

Donnovan: (interrupting Tim)...uh, I had a not-so-fun tax bill last year.

Tim: Yeah, taxes can be painful. I certainly don't enjoy paying Uncle Sam any more than necessary, either. To be honest, it is a really common reason we begin relationships with many of our clients. No one likes taxes, and, as you described, sometimes people end up with larger tax bills than they had expected, so they come in to talk about how to deal with that in a future tax year.

Donnovan: Glad to know I am not the only one!

Tim: Ha, no. You are for sure not the only one. It can be really hard to ask for that advice; I myself…before becoming a financial planner...was very reticent to talk a lot about finance.

Donnovan: Yeah, but you probably knew a lot about finance and were really organized.

Tim: No. Not really. I actually didn't know much of anything about finances until I purposefully started researching finances and went to school to get into this line of work. And I wouldn't say I was super organized either; in some ways, I still struggle with that…

Donnovan: Okay, but like you need to be rich to work with a planner?

Tim: Well, it turns out that isn't entirely true either...for example...when we work with clients on taxes...

It doesn't really matter what Tim, the advisor, says next; the main point is that Tim has Donnovan talking openly about finances! He has normalized some of the fear and stress by just being a bit vulnerable himself. Tim isn't giving advice; he is simply talking about how he works with clients, and explaining what the financial planning process actually involves is helping to alleviate some of Donnovan's anxiety.

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When individuals struggle with Financial Advisor Anxiety (FAA), judgment and shame around how a person manages their finances can be paralyzing forces. And often, the anxiety one feels usually isn't just about money itself; rather, it is frequently more about what money personally represents for the individual and how they believe they will be negatively evaluated as a person for mismanaging their resources.

Accordingly, advisors can help alleviate the impact of FAA by reassuring prospects that their fears are valid and respected, and by helping them develop some basic financial literacy skills –even before they ever come in for an introductory meeting. These simple steps can have a huge impact not just on persuading prospects that it is indeed safe for them to connect with an advisor but on establishing a solid foundation on which an ongoing relationship can be built!