Read more: Client mental health is affecting wealth management decisions
According to research released by the Canadian Mental Health Association (CMHA) in March, 46% of Canadians are getting stressed as they have to cope with uncertainty. Bridgehouse has also confirmed through its own research that major changes in financial state can induce stress and anxiety for individuals.
“Aside from major financial changes, life-altering events like having a baby, buying a house, or going through divorce could lead to stress-induced health breakdowns,” Lynde continues. “We use a tool called the Holmes-Rahe Life Stress Inventory. It indicates an individual’s susceptibility to those types of breakdowns, and we’ve shared it across the country with financial advisors and investors.”
More concerningly, statistics from the Mental Health Commission of Canada found one in five Canadians will experience a mental health problem or illness in any given year. For its part, Bridgehouse also found over 90% of financial advisors have encountered clients with mental health challenges that impact their financial decision-making; that was in May 2020, during the thick of the COVID-19 pandemic crisis, though today’s environment of economic and financial turbulence also lends itself to negative reactions among clients.
“We always talk about vulnerable investors. But when you’re facing an extreme situation, you’re likely to go to one of three responses: fight, flight, or freeze,” Lynde says. “No matter your age, gender, wealth level, or occupation, we all react in a certain way, and we have to think about how we’re reacting as we’re stimulated by these forces.”
