Financial Uncertainty Spurs Anxiety and Depression

Alongside the death of a loved one and having a serious medical condition, financial problems are among the leading causes of anxiety and depression. 

In fact, nearly 70% of Americans said financial uncertainty has made them anxious and depressed, according to a new report from Northwestern Mutual. While money problems and the intense emotional responses that come with them decrease significantly when someone works with a wealth manager, advisors still encounter the occasionally stressed-out client who needs extra reassurance.

“It’s a tough cycle when financial problems start to impact someone’s mental health,” said Ashley Folkes, vice president and wealth manager at Farther. “It’s common for my clients to immediately jump to worst-case scenarios, especially those with a ‘glass half empty’ outlook.”

Anxiety, Keep on Tryin’ Me

Finance-related anxiety and depression don’t just pop up whenever clients look at their portfolio and savings. Worries about money and assets can bleed into nearly every aspect of daily life, including relationships, job performance, and more, the report found:

• Some 63% of Americans say money worries have kept them up at night, tossing and turning, at least once a month.
• Four in 10 Americans say that financial worries have made them feel physically ill.

The worries are most acute among younger demographics, with 39% of Gen Zers and 38% of millennials reporting that they feel depressed and anxious on at least a weekly basis due to financial uncertainty — up 8 and 5 percentage points, respectively, from 2023, according to Northwestern Mutual.

Lend an Ear. Having a wealth manager increases financial confidence, as 76% of Americans who work with an advisor describe their finances as “strong,” compared with just 44% of those who don’t, the report found. However, current economic conditions are  defined by uncertainty, volatility, and tense global trade relations. So it’s easy for even clients with trusted advisors to be spiraling into panic mode right now. 

Financial planning has moved far beyond just portfolio management, and occasionally that means advisors acting almost like therapists, said Matt Nichols, partner and private wealth manager at Northwestern Mutual’s Freedom Wealth Advisors. He recommends being an active listener, regularly reminding clients of their long-term goals, and referring clients to a mental health expert if their distress is profound. 

“Oftentimes, emotional distress has nothing to do with the current markets but how they were raised as a child or their life experiences to think about money,” Nichols told Advisor Upside. “We spend a lot of time unpacking and unwinding behaviors behind financial decisions that go far beyond interest rates and rates of return.”