This past year has been both challenging and profitable for many of the financial advisors that I coach.
Despite the difficult and often tumultuous markets, they remained focused on their vision, connected to their clients and, as a result, received an abundance of new referrals. Yet other advisors remain stymied and continue to feel overwhelmed by a financial environment they cannot control.
The difference between these two types of advisors lies in their ability to identify their own diverse stress indicators and respond to those signals effectively. In confusing and ambiguous times, managing your stress successfully can be the ultimate key to having a competitive advantage in business.
Stress is a necessary part of our survival. It is defined in scientific literature as “the non-specific response of the body to any demand placed upon it. Research suggests that we are continually bombarded by physical and emotional demands or stimuli in our world. Each of us has our own internal mechanism of realigning our body’s reaction to this stimuli and coping effectively. But when faced with an event or thought (called a stressor) that overwhelms our ability to maintain this equilibrium, it can result in a negative physical, emotional, cognitive and/or behavioral response.
For example, if you are extremely concerned about the impact of the market decline on your clients’ portfolios, you may experience muscular tension, headaches, chest tightness, distractibility, anxiety, depression, angry outbursts or difficulty sleeping. This inability to manage our stress appropriately is what we call a stress reaction.
A coping response is anything you do that helps you deal with the stress reaction in a way that provides some relief. These coping responses can be either adaptive or maladaptive. These maladaptive coping responses such as: drinking excessively, smoking, abusing drugs (both prescription and street drugs), or avoidance behavior, work temporarily but have long-term negative consequences. Adaptive coping responses may take more effort to learn, but they produce both short-term and long-term benefits and results. Examples of this type of response include: relaxation, meditation, problem-solving, positive self-statements, exercise, hobbies, etc.
Common Stress-Related Behavioral and Thinking Patterns
The two most common maladaptive behaviors people engage in when they are feeling overwhelmed by stress is to do nothing (avoidance behavior) and/or to engage in irrational thinking.
In approach-avoidance behavior the further we get away from someone or something stressful, the calmer we feel. The tendency is to “shut down” and do nothing when the fear of making a mistake becomes overwhelming. During the recent market turmoil, we have witnessed both clients and advisors engaging in avoidance behavior in an attempt to escape the negative impact of this type of reaction.
But ultimately the anxiety builds up. And, avoidance makes the situation worse. For example, you may avoid contacting a client you believe will be upset with you about decisions made concerning their account. Or, you call at a time hoping the client won’t be home and the answering machine will pick up instead. While initially you may feel relief avoiding a difficult conversation, eventually you will be distressed that you didn’t speak with the client and have the opportunity to resolve the situation.
During stressful times such as a volatile markets, people often engage in irrational thinking, resulting in unrealistic beliefs and expectations of themselves and others. In addition, when things don’t go well for us we can feel like a victim of circumstances and blame external situations for our own negative stress reactions.
The stress model I am presenting suggests that events in the environment are neutral. Whether or not we having difficulty coping, depends on what we tell ourselves about a situation and the subsequent actions that we take. Therefore the first step to coping effectively during stressful times is, in fact, to understand that you cannot control the environment; you can only control your reaction to the environment. Those individuals who demonstrate the ability to anticipate, persevere. They remain focused and take action in spite of the obstacles.
The Stress Management Plan
By understanding your own stress-related reactions to the market fluctuations and evaluating your current stress management strategies, you can develop an action plan for yourself and your practice. This will allow you to not only cope better, but guide your clients more effectively.
In my work with financial professionals I recommend the following behavioral strategies in the creation a Stress Management Action Plan:
1) Keep a Stress Management Log: Record the stressful situations you experience over a two-week period. Be sure to include your stressors, your stress reactions and your current coping responses.
2) Create behavioral strategies for managing your own stress: After recognizing circumstances that “set you off” and patterns in how you typically respond, the next step is to modify your current ineffective behavior and substitute more effective coping responses. Some suggestions are:
- limit outside negative influences (i.e. avoid watching “talking heads” and pessimistic people);
- continue recording stressful events and responses in a journal;
- make a list of daily action steps;
- * listen to relaxation or meditation tapes before bedtime;
- exercise;
- make time for non-work interests and hobbies.
3) Create governance rules for your business: Predictability, consistency and accountability are essential for ensuring client confidence. Take the initiative and create office policies that will help you manage your own work-related anxiety, along with client expectations. Steps to take include:
- creating a client communications calendar;
- improving responsiveness to client needs;
- creating a return call/email policy; and finally;
- creating a client log identifying needed action steps.
The good news is that we can successfully modify our behavior and learn strategies going forward. The bad news is that making these necessary changes can be difficult. As a part of this process you likely will have to engage in new behaviors that initially might make you feel uncomfortable. Keep in mind is that behavior is easier to change than feelings. However, taking action and getting out of your comfort zone is critical if you are going to see progress, learn more productive coping responses and achieve the next level of success.
This article was originally published On Wall Street.
