Keeping Your Mind and Emotions Focused in Crisis and for Growth: Practice Edge, March 2010

Former baseball player and manager Yogi Berra once quipped that baseball is 90% mental and the other half is physical. Like athletes, advisors need to pay attention to their mental game. The 2008-2009 economic downturn not only had a significant effect on client portfolios, but had a sociological impact on advisors and on clients. In the latest Rydex AdvisorBenchmarking survey, conducted in November-December 2009, almost 60% of advisors said that their quality of life was negatively affected by the economic downturn. Only 9% of financial professionals said their quality of life was positively affected and one-third said their quality of life was not affected (see Chart 1: How the Crisis Affected Advisors’ Lives).

Clients rely on investment advisors not just for their experience and expertise in investment management, but also because of their emotional and psychological outlook. It’s therefore crucial for financial professionals to have the right mindset even in challenging times. In order to recharge themselves and provide support to clients as well as leadership to their practices, 54% of advisors are spending more time with family and friends, 50% have enhanced their exercise routine, 29% have changed their diet regimen and 23% have engaged in a personal hobby (see Chart 2: How Advisors Keep Themselves Emotionally Healthy in Crisis).

Despite the challenging market environment, job satisfaction remains high for RIAs. On a scale of 1 to 5, 84% of advisors surveyed gave top ratings (4 or 5) to job satisfaction. Though it’s a highly rewarding profession, being an investment advisor can be stressful (see Chart 3: How Stressed Do Advisors Feel?, below). On a scale of 1 to 10, the average level of stress is about 6. Compared to a year ago, the stress level increased for 34% of RIAs and decreased for 45%. For 21% of advisors, the stress level remains the same as a year ago.

In the next year, advisors (72%) expect to grow their businesses, but that suggests that advisors’ stress levels will likely keep pace. While several factors should contribute to booming growth for financial advisors–including the fact that baby boomers are retiring and the financially savvy Generation X is reaching its peak earnings years–it’s getting harder and harder to succeed in the business. Taking some of these measures to handle stress and recharge will not only help your mental health, but will also help you offer better service to your clients.

1. l Find balance–don’t neglect your health by focusing only on work

   l Focus on what you can affect

   l Devote time and energy to an issue that’s really important to you and your

   clients

   l Get enough rest

   l Spend more quality time with your family and friends

   l De-stress and recharge so you can lead with energy, wisdom and confidence

   l Boost your self-esteem by setting meaningful, achievable goals and by

   continually working on your skills to improve your value to your clients

   l Eat a balanced diet

   l Exercise to relieve stress and lift your mood

Remember the wisdom of Yogi Berra, the advisory business is 90% mental. Investment professionals who are emotionally healthy are better able to handle life’s inevitable challenges, build strong relationships with their clients and lead productive, fulfilling lives.

Maya Ivanova is a market research manager with Rydex|SGI AdvisorBenchmarking She can be reached at [email protected].

Rydex|SGI AdvisorBenchmarking is a research and analysis center focused on the registered investment advisor (RIA) marketplace. The service is aimed at helping advisors grow and enhance their firms by comparing how their businesses fare against other advisors. Advisors also learn best practices of the most successful advisors in the business.