Clients with mental health issues at risk of poor financial decisions

Annually, 20% of Canadians will experience a mental health or addiction problem, finds a 2011 research paper from the Mental Health Commission of Canada. And when Canadians reach 40, one-in-two have or have had a mental illness.

Chances are your client will be one of those affected—and they may need your help to avoid poor financial decisions.

Read: Identify these client handholding situations

Almost three-quarters of advisors (72%) have encountered clients suffering from anxiety, finds research commissioned by Bridgehouse Asset Management. Other conditions that advisors have faced with clients include:

• diminished financial capacity (64%),
• depression (54%) and
• substance abuse (34%).

Read:

How the industry can protect vulnerable investors

When addiction and advice mix

In all cases, advisors found that the issue negatively affected sound financial decision-making, and 85% of advisors spent more time with clients suffering from mental health issues, relative to other clients.

In a release, Bridgehouse president and COO Carol Lynde noted the value advisors provide to clients in such situations. “Financial advisors who work face-to-face with their clients can read subtle clues that suggest mental health conditions and situations that may be driving unwise choices,” she says.

The survey also finds that most advisors would like resources to help them with clients who have mental health issues.

For example, 88% want a transition kit for dealing with Alzheimer’s or dementia, and also continuing education (CE) related to mental health. And more than 80% cited the need for a behaviour primer, community resources information, seminar and other identified supports.

Read: IFIC proposes protections for senior clients

Bridgehouse has issued recommendations for the industry to address client mental health issues, drawing on the research, as well as mental health guidance from the Canadian Mental Health Association.

Industry support includes guidance on trusted contact persons, and more personal support includes the development of CE for advisors about mental health.

For survey details and the firm’s recommendations, see this infographic.

About the survey: On behalf of Bridgehouse, Navigator conducted a national online survey between Dec. 18, 2017, and Feb. 13, 2018, to understand the relationship between mental health and financial advice. The sample was collected via an open-link format: Bridgehouse or its representatives sent advisors an email seeking their participation, and it was completed by 193. An earlier research phase conducted in November 2017 included 16 in-depth interviews with advisors across Canada.