How to Deal with Clients Beset by Anxiety, Fear or Greed
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Does this scenario seem familiar?
A client calls. He’s upset about his performance and is having difficulty dealing with the “stomach-churning” volatility of the market. He wants to “flee to safety” until “things settle down.”
You are well-prepared to deal with this issue. You know the long-term data and the merit of ignoring short-term noise.
You attempt to put his concerns in perspective by explaining how the market “smooths out” the longer you look at returns.
Your data is overwhelming, but it doesn’t convince him. He says he will think about what you said but leaves as agitated as when he arrived.
Understand anxiety, fear, and greed
Anxiety, fear, and greed are powerful emotional responses deeply ingrained in human behavior.
- Anxiety: Anxiety is a feeling of unease that can be mild or severe. It's a normal and often healthy emotion. But when a person regularly feels disproportionate anxiety levels, it can become a medical disorder.
- Fear: Fear is an emotional response to a known or definite threat. Fear is a primary survival mechanism that triggers our body's "fight-or-flight" response.
- Greed: Greed is an inordinate or insatiable longing, especially for wealth, status, and power.
Anxiety, fear, and greed are potent emotions. You can’t deal with a client experiencing them unless you understand how the brain processes them.
Logic is ineffective
Studies in neuroscience have found that emotions originate from the amygdala, a brain region responsible for emotional processing. In highly charged emotional states, the amygdala can overwhelm the prefrontal cortex, the brain's rational decision-making center. This process, known as “amygdala hijack,” can lead to irrational behavior.
The emotionally overwhelmed brain cannot assimilate and act upon rational information. In these circumstances, a more effective approach would be to acknowledge and address the emotions directly rather than attempting to combat them with logic.
A different approach
You can show highly agitated clients compelling data all day but only exacerbate their feelings.
Think about adding water to a full glass. The glass has no more capacity.
Your emotional client cannot process the data you are disseminating. His amygdala has been “hijacked.”
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Research shows that empathy – the ability to understand and share the feelings of others – is a potent tool when dealing with clients grappling with powerful emotions. Displaying empathy helps build trust, demonstrates understanding, and reduces emotional agitation.
Here are some suggestions to replace a data dump with empathy:
Active listening is a fundamental aspect of showing empathy. When a client is stressed about market volatility, listening without interruption and letting them express their worries is essential.
For example, the client might say, "I'm apprehensive about my investments. The market is volatile right now, and I fear losing everything."
In response, an empathetic financial advisor would say, "I hear your concerns about the current market volatility. It's completely natural to feel this way when markets fluctuate. How can I help?”
Financial advisors should acknowledge and validate the feelings of their clients, making them feel heard and understood.
In response to the client’s concerns, you might say, "I understand why fluctuations in the stock market can be unsettling. It's a stressful situation and feeling apprehensive is normal.”
Reassurance can be effective, but only in a limited way and after showing empathy.
Remind your client of their long-term investment strategy, emphasizing that volatility is a natural part of the market and that their plan is designed to weather these ups and downs.
You could say, "I know market volatility is causing worry right now, but remember, we've planned for these situations. Your portfolio is designed with long-term growth in mind and is built to withstand temporary downturns."
Sometimes, clients want to know you have heard them and “have their back.”
You could say, "I want to assure you that I'm monitoring the market closely and will keep you updated on any significant changes that could impact your investments. I'm always here to answer any questions or concerns."
Transition to rational thought
Your goal is to “un-hijack” the amygdala, so the pre-frontal cortex can return to processing rational thought. You can do this by expressing empathy.
Pay attention to verbal and non-verbal signals from the client. Perhaps not at the initial meeting but at some point, if you have shown empathy, they will calm down. They can process the data you are eager to share at that time.
Dan trains executives and employees in the lessons based on the research in his latest book, Ask: How to Relate to Anyone. His digital marketing firm makes extensive use of artificial intelligence to help advisors increase their SEO rankings and improve their marketing and helps advisors integrate AI into their practices.