Why planning ahead reduces future headaches, improves performance
When market downturns occur, advisors can expect a flurry of calls from nervous clients stressed about the impacts this event could have on their portfolios. And the uncertainty from US President Donald Trump’s tariff policy has created a perfect storm for investor stress, with his brash decisions swinging almost daily.
This investor stress can be passed onto advisors, who can become flustered with the volume and emotional nature of the calls they are receiving, potentially leading to burnout and reduced performance levels.
To prevent advisor burnout, Tina Tehranchian and James McCarthy rely on two strategies. One is to curate long-term, diversified portfolios for their clients that stand the test of market plunges, while the other is to manage their work-life balance to ensure they can be in the right frame of mind to deal with challenges head on.
Tehranchian remembers when the dot-com bubble burst in 2001, a period of extreme uncertainty for investors and advisors. She says many advisors who heavily weighted their clients’ portfolios in the tech sector were not ready for the emotional pressures of seeing their clients’ portfolios drop, which prompted many to exit the industry entirely.
“I was an advisor during the tech bubble from 2000 to 2003 – that was a never-ending bear market. That was one of the toughest ones that I faced in my career, because of the length of it,” said Tehranchian, senior wealth advisor at Assante Capital Management Ltd. “I had colleagues who quit the business because they could not take the stress, they felt personally responsible for their clients’ losing money. They could not face those clients and the stress of having to come to work every day and see the market go further down.”
This experience reinforced Tehranchian’s belief in the value of preparing diversified portfolios to pre-emptively tackle future market troubles. She also highlights the fact that advisors have no control over the market, particularly when markets have been so affected by one person’s actions as they are now.
“The job of a financial advisor is very similar to a pilot,” she said. “It’s making sure that the plane stays on course, that you're rebalancing as you go along, bringing back portfolios to the target asset mixes and navigating volatile times. Because the markets are not in our control, just like the weather is not in the pilot’s control.”
McCarthy also believes that a well thought-out plan will reduce stress in the long run, noting that the stress clients feel from market downturns stems from uncertainty around their portfolio, rather than the markets themselves. He says that doing the leg work beforehand and proving to clients that their portfolios can withstand difficult economic conditions puts them in a calmer position when they are faced with market uncertainty.
“You can be extremely wealthy, but have no real financial plan or no real investment strategy in place. That's actually what causes you stress,” said McCarthy, wealth advisor at Nicola Wealth. “By doing all these financial planning exercises in advance, that brings clients back to a place where they feel more comfortable because they know how things are going to go.”
With constant access to communication, advisors are often reachable around the clock. McCarthy emphasizes the importance of maintaining a healthy work-life balance, leaving him time to recharge his batteries.
“I find that sometimes, if you're available, 24/7, then you never have any downtime. So you have to be strict with yourself to say; it's 7 or 8 PM, this email can wait until the morning,” he said. “You're no real use to anyone if you're burnt out or you’re stressed to the point where you can’t do your job effectively.”
However, tuning out of work is not a luxury afforded to McCarthy during moments of acute market downturns, such as the fallout from Trump’s “Liberation Day” announcements in early April. He says that advisors should develop solid work-life balance routines while understanding the need to work late through tumultuous times.
“If you look back to the first week of April, those were some of the roughest days in the market. I can understand having to work very late, or being on call those days, because those are exceptional days,” he said. “You have to make your peace with the fact that you're going to be working a little bit harder those days. But I think that's the exception to the rule.”
By maintaining consistent communication with clients, Tehranchian says she can provide insight and context which can relieve some of the stress her clients face after reading doomsday headlines. While she personally calls and emails many clients, she also uses e-blasts to ensure each client hears from her.
“I do send out e-blasts. I try to make them short, talk about current issues and how similar situations have panned out in the past,” she said. “My main goal is to give them perspective so that they can navigate the volatility with calm and confidence, because that's how you can come out ahead at the end of the day.”
To relieve some of the stress from the day, Tehranchian enjoys going on a short walk at lunch. She also reads during her downtime, an activity that has the bonus feature of providing historical context which she can pass on to her clients.
“I like reading, but I don't read fiction that much,” she said. “It’s mostly nonfiction, but it allows me to relax, gain perspective and have information or insights that I can share with my clients.”
