If your clients express worry about their money, it’s a good sign you need to be doing some work with them.Beyond hand-holding, although for some clients that is all you can do, creeping or all-consuming anxiety about money is often a sign of disconnect from their plans – if a plan for them exists – or a sign they don’t sufficiently grasp their financial picture at all.

“It’s interesting. Worry is not an action – you’re not doing anything. But worry is a good sign that people are uniformed, or unempowered,” says certified financial planner (CFP), Alexandra Macqueen. “I’ve worked with clients who are exuberant about their finances, and those that are absolutely pessimistic. Both (extremes) seem to be independent of their actual circumstances.”

That same story can manifest itself in a wide variety of ways – many of which will be familiar to any financial planner who’s been at work in the business for any period of time. In a lot of these cases, though, a little bit of client education can go a very long way.

Financial knowledge

Researchers have long found financially knowledgeable consumers are more likely to behave in financially responsible ways – if financially responsible behaviour is something which needs to be instilled with particular clients.

In a 2005 report of the Journal of Consumer Affairs, Vanessa Perry and Marlene Morris say their findings “support the premise that consumers’ propensity to save, budget, and control spending depends partly on their level of perceived control over outcomes, knowledge, and financial resources.”

“Individuals may not take full advantage of their knowledge or financial resources, unless they feel they control their own financial destiny,” they add.

Since that report, behavioural finance has exploded as a field of study. More recent research adding to it, shows that “scarcity” causes humans to focus on more short-term, pressing needs – whether it makes sense to do so or not. Simply feeling poor, they say, can also lower a person’s IQ by as much as a night without sleep.

Some generalisations can be drawn about who is most likely to be worried when they show up at your office. Anxious, wealthy widows abound, although their numbers are decreasing as more women begin to take on money management responsibilities for their families.

Money anxiety

More recently, planners anecdotally observe two groups which seem most prone to money anxiety: Those in their 40s, who aren’t quite in their peak earning years yet, but who do have a tremendous number of demands on their cash flow, and those in their 50s and 60s, who’ve observed their own parents’ declining years, and worry about being able to provide for themselves in better ways, particularly when the time comes to start looking at retirement homes.

“Not all of them, but if anyone is going to particularly negative, it’s those in their mid-40s,” says CFP and chartered life underwriter (CLU), Justine Zavitz of Zavitz Insurance. “I think it’s just because they’ve had some experience in the market, and they’re now at a point where demands on their money are quite high – they’re trying to get out of debt, save for their RRSPs, and their kids are in every competitive sport imaginable. All of a sudden, it’s all really expensive.”

Malcolm Ross, CFP, CLU, trust and estate practitioner (TEP) and president of Investaflex Financial Group, meanwhile, says as people get into their 60s, too, “they start to deal with their own parents’ morbidity. They don’t want to be in the same care home their parent was in.” But, in looking at the price of nice facilities, the sticker shock will send them into worry. “Frequently, there is a very high level of concern, the older a client gets, about their ability to sustain a quality of life, or the quality of care they want.”

Provide clarity

In all cases, they say probing a client’s reality is needed to demystify things – enough to provide peace of mind, or enough to provide clarity about what needs to happen next (whether “next” is a review of their plan, modifications to an existing plan, or an exercise in reframing expectations.)

Looking at the anxious widow, for example, Ross says the wife in a family, particularly in the past, often has a very good idea about what her expenses are, but might not understand how income comes in. “That happens, in many cases, because she was not part of the decision making. The wealth management was often handled by Dad.”

No matter what the client’s specific circumstances are, though, it’s clear that decision making can be ineffective, if not impossible, if it’s undertaken from a place of high anxiety. Decisions will be put off, unnecessarily, and opportunities can be missed – either while money waits on the market sidelines, in an obvious example, or while clients cling tight to it, missing opportunities for effective deployment of resources before they die.

“Once people understand they have sufficiency, they have the ability to say, ‘OK, what other purposes do I have in life?’” Ross says. “I can ask a client - OK, your kids are going to get $2-million each, is that enough?’ They’ll say, ‘Oh hell, yes!’”

Only from there, he says, is he able to point out more effective ways to use those assets – by giving their children an early portion of their inheritance to get set up in a principle residence, for example, thereby giving them the same jumpstart they hope to provide – but without dying first. “They can have the pleasure of seeing that.”

“What causes fear, for most people, is the lack of understanding, and their own experience,” he says. “You have to understand the root of everybody’s actions and behaviours if you’re going to help them align their (monetary) value with their values. Without understanding what the drivers are for people, it’s very difficult to develop a plan that’s going to truly reflect their needs. The way you help people avoid or overcome bad decisions, is by giving them the information they need to make appropriate, informed decisions.”