Financial Anxiety is Real

I often meet with clients and prospects who feel financial anxiety because they are worried they:

• Haven’t saved enough,
• Don’t understand what’s happening in the stock market,
• Can’t predict world events,
• Aren’t prepared for major life events. 

In reality, they are worried about all the unpredictable outcomes that could come around and are concerned that their financial hopes may not be realized because of these threats. When they meet with me, they wonder;

“Should I be making drastic changes to my financial plan because of temporary events in the world?”

If someone has already been working with me, in most cases I can say “No, let’s stick to the plan.” The reality is that a financial advisor cannot stop world events from taking place – and cannot anticipate every possible negative event. However, an advisor should be creating a plan with the client that is built around their individual goals.

But what are the risks?

The plan should be structured to identify the biggest risks that could be faced by a client. For example, a client near retirement who expects to make a significant withdrawal from their retirement account should be holding investments consistent with that goal. The goal was to have the money available, the timeline was already established, so the plan should have been an investment strategy that would help ensure the funds are available. If there was no plan, timeline, or strategy, then there is a real risk that the stock market could drop when the money is needed – at which time the money would not be available. 

What could go wrong?

After identifying the plan, the timeline, and the strategy, the client and advisor should talk together about the types of risks that could disrupt the plan. These risks could include job loss, stock market decline, disability, or death. Recognizing that these risks exist, and understanding the negative impact on the client and their loved ones leads to the steps that could be taken to protect against these risks – from insurance policies to investment strategies to savings plans. 

Understanding the major goals makes most of the other decisions easier going forward. Whether someone is interested in buying crypto, retiring early, dealing with high inflation, or experiencing stock market declines – the first response is to see how it affects the financial plan. The decisions made don’t need to be in a panic or out of anxiety. Instead, they can be focused on the goals of the client, the steps that can be taken to achieve them, and the self-control to stick to it.

“God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

There is truth to this related to financial planning. Understanding what is under our control and what is not can help us feel more confident that we have taken the steps to be preparing for the future – as long as we have addressed what we can control. Ultimately, this type of planning can help reduce some of the financial anxiety that affects everyone and can help individuals feel better about their ability to reach their financial goals.

What happens if…?”

The best way to be planning for the future is to have a plan in place with reasonable protection against risk before the unexpected events (that will always come around) actually happen. Acknowledging there will be challenges in the world is the exact reason there is a plan, and the role of the advisor – a good advisor- is to help stick to the plan and make adjustments when necessary.

Ready to make a plan? Here are 4 things to consider when approaching an investment strategy!