Advisers grapple with stress amid downturn

Concerns over economic woes and market meltdown fuel guilt, depression and even suicide

Mar 8, 2009 @ 12:01 am

By Jed Horowitz

Todd Bauerle wakes up at 5:30 a.m. to pray. Scott Roulston indulges in massages. Tom Orecchio eats.

These are some of the more benign approaches that registered investment advisers and brokers are taking to cope with deteriorating revenue, angry clients and occasional bouts of self-doubt as the economy and markets continue their descent.

In a survey of InvestmentNews readers conducted last week, 70% of 329 advisers said that the economic downturn and its effect on clients have negatively affected their physical and/or emotional health.

As stress rises, a growing number of advisers are discussing merging or selling their practices, and some have succumbed to severe bouts of depression.

"I'm very concerned about their well-being. I've had one adviser exit the business because of stress; I don't think he will be the last," said Wayne Bloom, chief executive officer of Commonwealth Financial Network, an independent broker-dealer based in Waltham, Mass., with about 1,200 brokers.

"We are all emotionally collapsing, to a degree, and there are times when I say I'd love to be doing something else," said Thomas Balcom, an adviser at Foldes Financial Management in Miami, which manages $250 million. He holds on, he said, because he feels an obligation to see clients who have entrusted him with their wealth through these hard times.

Mental-health professionals say that stress can trigger depression, which can lead some advisers to feel unjustified guilt over unpredictable client losses.

"They may know it's irrational to be able to predict something that hasn't occurred in generations, but when depression begins, they start second-guessing what they could have done," said Dr. George Alexopoulos, a professor of psychiatry at the Weill Medical College of Cornell University in New York.

Most people with mild depression can acknowledge their irrationality through treatment, he said, noting that he and his colleagues are seeing a growing number of patients from the financial world. However, depression can become so deep, Dr. Alexopoulos said, that some of those afflicted insist on taking full responsibility for their clients' ruin.

One Houston-based broker at an investment banking firm committed suicide in October after putting some long-time clients with allegedly conservative investment appetites into a municipal bond arbitrage fund that had lost more than half of its value. "Some of the investment recommendations that I chose did not work out the way that I anticipated," he wrote in a letter that a client received a few days after his death.

The letter, filed as part of a lawsuit in federal court that has been moved to arbitration, said the broker "always tried" to exercise his fiduciary responsibility to put his clients first but was misled about the investment by the bank and fund adviser.

"I cannot survive this financially or otherwise but want to do whatever is possible to aid you," the letter said, providing the client the name and phone number of his lawyer.


The best preventive measure for depressed advisers, and anyone in extreme circumstances, is to reach out to peers who understand their pressures and who can share solutions, medical experts say.

"Peers can help you reach an adoptive understanding of what needs to be done," Dr. Alexopoulos said. "The real resolution is to develop a cognitive map, a new intellectual framework for approaching a new situation."

Commonwealth's Mr. Bloom and Bill Dwyer, president of Boston-based LPL Financial's independent-adviser-services unit, said their firms have expanded the number of conference calls and small-group sessions for advisers to share their personal and business concerns.

Planners and advisers running their own businesses may have to work a little harder at networking.

Scot Stark, whose Stark Strategic Capital Management in Freeland, Md., a financial planning firm that manages $2 million, says it took him months to realize that other advisers were going through the same stress he was feeling.

"I was having trouble sleeping and, uncharacteristically, making decisions, until I talked to colleagues and realized they had some of the same experiences," he said. "These markets are an anomaly, but they shake your faith and make you question how you were guiding people."

Among his self-help solutions: a two-hour daily gym regimen (he's lost 50 pounds since last summer), avoiding e-mail and office visits on Sunday and a concentrated effort to focus on family, friends and other positives.

"If I had any negativity, I would be miserable now," said Gordon Bernhardt, a self-described "glass-is-half-full" RIA in McLean, Va., who said he has been reaching out more aggressively to clients even though there are only "so many times you can tell them to stay the course." Many, he said, have been a strong source of encouragement, asking him how he's holding up, even after tense meetings to review their portfolios and adjust their plans.

Mr. Bernhardt, whose firm's $100 million of assets that are invested primarily in passive-index-fund strategies, said he recently took a 14-mile weekend hike and has signed up for a 30-mile hike — unconscious efforts, he believes, to relieve stress.

Mr. Bauerle's firm, Bauerle Financial in Deland, Fla., oversees around $70 million of assets, down about 18% from last year. He's been sending clients religious books dealing with grief, has resumed playing basketball for the first time in six months and is taking stress-reducing supplements prescribed by a local naturopath. Mr. Bauerle also is planning an August meeting of a 13-adviser peer group where he may offer discussion of stress management.


Industry trade groups said they are playing their part in addressing advisers' psychological needs. The Financial Planning Association's annual meeting in April will feature a session on positive psychology led by Tal Ben-Shahar, a psychologist at Harvard University in Cambridge, Mass. Mr. Ben-Shahar defines positive psychology as the scientific study of optimal human functioning. He'll discuss current research on the science of happiness and "introduce ideas and tools that can actually make you happy," according to the group's registration literature.

Some advisers, however, seem to be stimulated by hard times.

"I'm more energized than ever," said Mr. Roulston, chief executive of Fairport Asset Management, a registered investment adviser in Cleveland. His team is employing new ways to reach out to their more than 250 clients, such as conference calls and blast e-mails.

"The focus has shifted from more traditional investment analysis to financial planning discussions about their short-term versus long-term needs," Mr. Roulston said. "We don't need to talk about the markets as much, because everyone knows what's happening there."

Tom Orecchio, whose Modera Wealth Management in Old Tappan, N.J., oversees about $450 million of client assets, is attacking stress the Mediterranean way.

"I'm eating," he said. "It's an Italian solution."

E-mail Jed Horowitz at


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