Your clients and mental health

The study also found that advisors have encountered clients with anxiety (with 72% of advisors saying so), diminished capacity (64%), depression (54%), substance abuse (34%) and bipolar and psychotic disorders (28%). In every case, advisors reported that mental health issues negatively affected their client’s ability to make sound financial decisions.

The study, conducted for Bridgehouse by Toronto-based Navigator Ltd., is part of a larger collaboration between Bridgehouse and the Canadian Mental Health Association (CMHA) that includes in-depth interviews and advisory panel input.

“We kept finding these overlaps between what financial advisors are facing and what community mental health workers were facing,” says Adam Wiseman, manager of the Forensic Assertive Community Treatment (FACT) program for CMHA Toronto.

“People don’t always make choices that get the outcome that they say they want on paper,” Wiseman says. “There’s a lot of psychology that goes into decision-making and it can be impacted by all sorts of external factors, such as divorce, a mental illness, a diagnosis, losing a job, getting a job, having children and losing a child.” These factors can have unexpected consequences on both personal and financial health.

With compromised mental health in particular, clients may experience a change in attitude that affects their behaviour. For example, generalized anxiety can cause clients to be unduly risk-averse.

“In the language of investments, anxiety translates into an aversion to financial risk,” says Lisa Kramer, professor of finance with both the Rotman School of Management and the department of management at the University of Toronto.

“While some degree of risk aversion is common and often advisable for most investors,” Kramer says, “when someone becomes excessively risk-averse, this can interfere with their ability to make sound financial decisions. In the extreme, someone who is excessively risk-averse avoids holding any financial products that are essential in planning for future financial needs, such as stocks, index funds and bonds.”

Similarly, clients who are depressed may be much less interested in holding assets that incorporate financial risk. This applies to clients who are either depressed generally or suffering from seasonal mood changes, such as seasonal affective disorder, a.k.a. the “winter blues,” Kramer adds.

Depressed clients also may feel no hope for the future, Wiseman says, and that outlook will affect the type of financial decisions they make. If someone isn’t hopeful about their future three years from now, they’re unlikely to think about 30 to 50 years out.

Sometimes, when a client experiences a mental health crisis, financial health goes on the back burner because the priority is to fix the problem at hand, Wiseman says. But ignoring financial health can affect the resources used to overcome the crisis, or the client’s quality of life once the crisis is resolved.

When a person suffers from compromised mental health, his or her family members suffer as well – sometimes, financially. A client may feel responsible for providing financial support to a troubled family member.

For example, a client may have a son who is unable to maintain employment due to a diagnosis of bipolar disorder. That client may be tempted to cash out his RRSPs to provide his child with housing.

“Long-term, that’s actually going to have a detrimental effect both on the client’s own mental health and on the outcomes for his or her son,” Wiseman says. If the parents use up their resources now, they may not be able to help their son, or themselves, in the future.

Your role is to help your clients adapt their plans without jumping into “fight or flight” responses that people have when they enter a crisis, Wiseman says.

– IT BEGINS WITH “ONBOARDING”

Although you can never take on the role of therapist, there are strategies you can use to support your clients. The help you provide in this area often begins during the onboarding process, when you create an environment in which your client feels safe enough to talk about compromised mental health.

A good starting point is to avoid language that can be stigmatizing, Wiseman says. For instance, don’t describe the markets as “totally insane” or refer to another person as “crazy.”

This stage also presents an opportunity to make your client comfortable in disclosing personal matters. Ask open-ended questions, such as: “Is there anything that may affect your ability to make good financial decisions in the future?”

Says Wiseman: “We have to be human toward each other. We have to tune in, be supportive and create environments in which people can have open communication.”

– SPOT THE SIGNS

Once you establish good rapport with your client, spotting signs of a crisis will be easier to do. One of the more common signs of compromised mental health is a change in baseline behaviour, Wiseman says. For example, a client who always wears a suit and tie but begins showing up to meetings in a baggy sweater and exhibits declining hygiene may be indicating an incipient mental health crisis.

Says Wiseman: “You might want to say, ‘You know, you’re usually dressed to the nines when you come in here, and you’re presenting a little differently. Is anything going on?’ You might find out there’s some change in [this client’s] personal life. These are the types of conversations that might help you learn of a recent divorce or health diagnosis so that you’re better able to support them.”

Other warning signs include erraticism, unusual displays of emotion, changes in interactional style (such as pressured speech) and uncharacteristic suspiciousness, adds Moira Somers, neuropsychologist and executive coach at Winnipeg-based Money, Mind and Meaning.

“So much of being able to detect [such changes] is predicated on the advisor’s previous relationship with the client,” Somers says. “The better the advisor knows the client beforehand, the more likely he or she is going to be able to pick up on signs.”

– GET A SECOND OPINION

If you suspect a client may be experiencing a mental health crisis but don’t feel confident in broaching the subject yet, you may bring in an assistant or an associate for a second opinion, says April-Lynn Levitt, business coach with Waterloo, Ont.-based The Personal Coach. This step can be particularly important regarding issues of mental capacity.

From a compliance standpoint, be sure to keep notes of your interactions with the client, Levitt says. Notes also are a useful tool to help keep your clients on track and help track changes in financial behaviour. Writing down key points and listing your recommendations can create a resource to help your clients stay up to date – if you give a copy of the notes to your clients after each meeting.

Levitt also suggests keeping private notes to mark any suspected changes in behaviour. For example, if you notice a significant change in your client’s mood, that observation is worth jotting down for future reference to determine whether the client was just having a bad day or if the change in mood may indicate something more serious.

– EMPLOY COMMUNICATION TECHNIQUES

Wiseman recommends an approach called “motivational interviewing” for speaking with clients about how they’re doing. This technique looks at the confidence and conviction behind clients’ decision-making so you can empower them to achieve their goals.

For example, most people know that practising an addiction is not in their best interest, but people with addictions find changing addictive behaviour extremely difficult. However, Wiseman says, if you help people identify what they want, both in the long term and the short term, you can help build their conviction that their goals are important and develop their confidence so that they believe they have the ability to accomplish them.

This type of conversation can help clients make better financial decisions and keep them on track toward reaching their financial goals. These discussions should never be leading conversations from your perspective, Wiseman adds. The purpose is always to identify the client’s own goals.

To succeed in these conversations, Wiseman says, you must retain a position of “rational detachment,” which means not taking offense when a client is venting or releasing anxiety or frustration surrounding a mental health crisis.

“It’s important to have top-notch communication skills and the ability to stay calm and not take things personally,” Wiseman says.

– IDENTIFY A TRUSTED CONTACT PERSON

As of Feb. 5, 2018, U.S. firms are required by the U.S. Financial Industry Regulatory Authority Inc. to designate a trusted contact person (TCP) for clients. The Bridgehouse/CMHA collaboration recommends TCPs be used in Canada so that advisors can support vulnerable clients without being exposed to regulatory complaints or liability risk.

For example, a TCP can help you if there’s a suspicion of mental incapacity or potential fraud and abuse, or if you want to help a client receive outside support, such a medical assistance

To designate a TCP, an informal document is signed by the client giving his or her consent to release information if you have concerns about the client’s behaviour or transactions in his or her account.

A TCP differs from power of attorney in that the TCP has no authority to make financial decisions for the client.