The ABC Model: How Advisors Can Help Manage Client Stress

Investor discomfort in handling financial issues is one of the most common reasons that they hire a financial advisor, according to recent research from our team.

It’s not just about increasing returns. For example, one respondent told us, “The market can be a daunting place and [my advisor] help[s] me navigate based on my needs. I would rather trust someone with expertise than learn on my own.”

This response encapsulates the thought process of many investors who’ve hired a financial advisor. Clients recognize they don’t have the time, knowledge, or resources to make the best decisions for their finances themselves.

There’s good reason to seek out help when facing discomfort with finances. On top of being unpleasant, worrying about finances can also lead to people feeling generalized psychological distress, and people who are stressed by their finances are more likely to exhibit signs of depression.

Unfortunately, having money is not enough to resolve the strain that financial stress can put on someone’s mental well-being. People’s subjective perception of their wealth is not always linked with their monetary reality—which means that even if someone is well-off, they are not immune to the feeling the stress of their finances and the negative downstream effects.

How Do Advisors Help Diminish Stress for Clients?

To answer the question, let’s look to the ABC-X model of stress, which examines how a stressor, A, leads to a stressful (or not stressful) outcome, X. This model can help explain why different clients react differently to the same financial stressors and what advisors can do to alleviate the strain those stressors can cause.

Here’s how this model works:

• A refers to the stressor at hand, which can include anything presenting a challenge that requires a response. An important feature of stressors in this model is that they are inherently neutral. That is, they do not have to lead to bad X (outcomes). Instead, the outcomes depend on factors B and C. For example, receiving an inheritance you didn’t plan for is an A stressor, and so is a pricey medical bill.
• B refers to the resources people have to navigate the challenge. These can be an individual’s internal resources, such as their perseverance. But they can also be external resources, such as an individual’s social support and their broader safety net.
• C refers to the perceptions people have of the stressor—that is, what do they think about it? Is it horrible? Is it just another challenge to conquer? The way that a person perceives a stressor will affect how they respond to it.

In this model, any given stressor can lead to a good outcome if people have the right resources and perception of the stressor.

Financial advisors can help with both of these factors. A financial advisor is another resource that people can draw upon when they are confronted by a stressor. Advisors can help them execute actions, explain important considerations, and more.

But what may be less obvious is that advisors can also help shape investors’ perceptions of the stressor through behavioral coaching. Advisors can help clients see new opportunities in the situation, provide perspective, and help clients identify the strengths they have that can help them cope with the stressor.

Showing Prospects You Can Give Them Peace of Mind

To that end, we recommend that advisors who want to convert prospects into lifelong clients speak to their need for peace of mind from the start. This can involve highlighting how your expertise can reduce decision-making anxiety and provide clarity on different investment options. It may also include emphasizing your commitment to build a financial plan that will help them reach their goals.

But a particularly effective way to help clients see how you will help them achieve peace of mind is through storytelling—that is, providing compelling anecdotes from previous client interactions.

To do so, I recommend using the ABC-X model as a framework for your story. This framework will help you show prospects how you act as a resource and provide perspective to clients when they’re confronted with stressors.

• A: Share an anecdote about a common stressor that clients face (if you’re really advanced, you can create one anecdote for any number of common stressors and share the one most relevant with each client). When talking about the stressor, identify the challenges a previous client faced with it: What did they have to decide? Where were the opportunities available? Where were the pain points? You want to show that you understand how these stressors can make clients feel.
• B: Demonstrate how you served as a resource to clients for handling a stressor. Show them how your expertise was used to help solve the problem. For example, you might talk about how you were able to compile different options for your clients and explain the benefits and drawbacks of each. Here, you have the opportunity to highlight how your clients relied on your expertise so they didn’t have to spend the time and energy figuring it out on their own.
• C: Talk about how you informed your client’s perceptions of the event. For example, you may have reminded your client that a down market gives them the opportunity to see things as a buying opportunity instead of just as a hit to their portfolio. Here you can show clients that there are different ways to view stressors that they may not have considered without your help.
• X: Share your client’s happily ever after. How did your client ultimately handle the stressor? How did they feel? Quotes from your clients may be especially impactful here, as they give prospective clients the opportunity to hear how working with you changed how stressful the outcome was for your clients.