More Financial Advisors See Mental Health and Family Influence Affecting Financial Decision-Making
Advisors Serve Clients as Counsellors, Financial Caregivers and Bridge Between Family Members
TORONTO, Dec. 14, 2020 /CNW/ - Research released by Bridgehouse Asset Managers shows that client and family mental health challenges are having a negative impact on financial decision-making. Family influence is also affecting decision-making, leaving some clients vulnerable and susceptible to financial abuse. Further, the pandemic and isolation are adding extra layers of anxiety and complication. The findings come from quantitative and qualitative research conducted by Navigator Research on behalf of Bridgehouse Asset Managers in October 2019, May 2020 and August 2020.
Navigator Research reported 92 per cent of financial advisors surveyed are seeing anxiety, dementia, Alzheimer's, depression, gambling, substance abuse and medication impairment affect their clients' decisions. In addition, 74 per cent of advisors reported family mental health as having a negative influence on client financial decisions. Almost half of advisors (46 per cent) have had clients who may be susceptible to elder financial abuse and 31 per cent suspect some of their clients are under pressure or financial abuse by a spouse or partner.
"Advisors on the financial frontline are well-positioned to see unusual client behaviour and family dynamics," says Bridgehouse president and CEO, Carol Lynde. "Almost every financial advisor is seeing client mental health issues and that's up significantly from three years ago when we started investigating the issue. What's new is the impact of family member mental health and influence on financial decision-making. This can be a dangerous setup for investor vulnerability and financial abuse."
"Advisors are still uncertain about how they can help clients without breaking client confidentiality," says Lynde. "A third of advisors report using a Trusted Contact Person (TCP), which is a helpful consent tool in the medical and mental health world." The TCP enables advisors to get upfront consent to contact a third party if they have concerns about a client's mental state or suspect their client is in an abusive situation. A TCP can intervene and seek medical or legal help but has no financial decision-making authority. Navigator Research reported a third of advisors currently use the TCP and others are waiting for their firms to approve it.
Advisors (89 per cent) are highly supportive of "Safe Harbour" regulations that enable them to take urgent, short-term and protective action when they see signs of mental vulnerability or financial abuse. Advisors (74 per cent) also support sharing information between advisors and firms if a client abruptly requests to transfer funds to another advisor, which can indicate interference.
"Advisors told us that client relations involve counselling, and they want more skills and strategies to prevent clients from upending their financial plans," says Anne Kilpatrick, managing principal, Navigator Research. Advisors (83 per cent) want accredited skills training on how to support vulnerable clients who face mental health challenges.
"In the in-depth qualitative interviews, advisors described themselves as financial caregivers," says Kilpatrick. "Advisors said they were absorbing and 'invibing' client anxiety and stress. Advisors told us they acted as a bridge between family members, some of whom were influencing their clients."
"One advisor said financial planning can prevent vulnerability because you can assess a client and it forces candid conversations. Transactional approaches miss key signposts that something is wrong," says Kilpatrick. In in-depth interviews, advisors said they entered financial services because they were interested in investing. They found out quickly that the financial advice relationship involves client counselling and financial caregiving that requires an entirely different set of interpersonal skills.
The pandemic has caused client anxiety and increased interest in life insurance products, will reviews, setting up POAs and getting their house in order. Initially, clients were "scared, stuck and in a state of panic" and looking for "direction, confidence and comfort." Advisors said they were able to calm initial reaction to the pandemic and prevent clients from upending their finances by pointing out the emergency funds and diversification built into their financial plans. The majority of advisors said that they didn't make many (if any) changes to client portfolios because they were already built to withstand downturns.
Older, isolated clients craved more connection with their financial advisors. There was an immediate interest in more contact and advisors struggled to transition quickly to meet the increased demand. Videoconferencing communication made it challenging to assess client comprehension, body language and facial expressions. Some advisors reached out to their clients' TCP to make sure clients received and understood information.
Some advisors reported using role-playing and debriefing with other team members to prepare for difficult client calls and made sure they recorded pertinent information. Advisors and their teams leaned on each other to cope with stress and to adjust to longer hours and challenging remote communication.
"We're witnessing many Canadians in insecure financial situations. It's in society's best interest to keep as many Canadians as possible financially secure and financial advisors are well-positioned to do the job," says Lynde. "Advisors are asking for Safe Harbour regulation, support tools like the TCP and guidance on privacy and counselling education to help keep investors financially secure."
Visit bridgehousecanada.com/mental-health/ for more details on the research results, as well as related program tools and resources.
About Bridgehouse Asset Managers:
Bridgehouse Asset Managers (Bridgehouse), the retail trade name for Brandes Investment Partners & Co., is an independent platform for products from investment managers with deep institutional roots, including: Brandes Investment Partners, L.P., GQG Partners LLC, Lazard Asset Management (Canada), Inc., Morningstar Associates Inc. and Sionna Investment Mangers Inc. Through financial advisors, we aim to help Canadians build their long-term wealth by following sound investing principles. Bridgehouse develops product and value-added tools and CE-accredited training to help advisors build stronger ties with clients and maximize the benefits of the financial advice relationship. Our end-goal is to help investors make informed decisions and achieve their long-term financial goals.
Bridgehouse Asset Managers commissioned Navigator Research to undertake qualitative and quantitative research. Navigator conducted interviews for qualitative research and then quantitative research with advisors across the country. Bridgehouse Asset Managers® is a trade name of Brandes Investment Partners & Co. (Bridgehouse). The information has been gathered from sources believed to be reliable; however, Bridgehouse is not responsible for any errors or omissions contained herein. Bridgehouse assumes no liability for any loss or damage suffered as a result of the use, misuse or reliance on the information and content herein. This material is not intended to provide legal, financial, medical or other advice, and may not reflect the thoughts and opinions of Bridgehouse. Information provided is not a substitute for professional advice. If you feel that you may need medical advice, please consult a qualified health care professional.
For more about Bridgehouse, please visit bridgehousecanada.com and follow us on LinkedIn.
This news release is for information purposes only.
SOURCE Bridgehouse Asset Managers
Media Contact: Samantha Hill, AVP, Sales and Marketing, Bridgehouse Asset Managers, 416-306-5723, [email protected]
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