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.”

Meeting digital natives where they’re at isn’t always easy.

But with more than a third of Gen Z investors citing influencers as a “major factor” in their decision to buy, experts say that advisors — an aging demographic, by all accounts — need to be attuned to younger generations’ habits. Nearly half of Gen Z uses social media as a primary source of investing information, compared with 42% of Millennials and 26% of Gen X, according to recent research from Finra and the CFA Institute.

“[Social media is] where younger people are,” said Kyla Scanlon, an influencer and founder of the financial education company Bread. “That can be difficult for a lot of [older advisors], where they’re like, ‘Oh, I prefer to do everything the old-fashioned way,’ and that doesn’t work with younger people … They get all their information on social media.”

Generation Nihilist

Rising costs of living and stagnant wages have contributed to feelings of financial nihilism — someone’s sense that they’ll never be financially stable, or homeowners, or retirement-ready — in every generation, but particularly Gen Z:

• Less than one in three Gen Zers is currently saving for retirement, a Bankrate survey showed, with 30% of this demographic “feeling behind” on retirement savings.
• This generation is also twice as likely as the general population to say they don’t know where to find an advisor, despite being, on average, 13 percentage points more likely to want one.

There are several ways advisors can harness the power of the internet to expand their reach. Taking a “personal approach” is key in an age of branding, since Gen Z is wary of ulterior motives in advertising and online financial advice, Scanlon said. “The way that [advisors] should approach it is that character-based approach,” she said. “It’s not like, ‘I will have Blackrock ETFs and VanEck ETFs.’ It’s, ‘I am a person who’s going to help you through this.’”

Utilizing client testimonials can also be a powerful tool in the review-centric era of sites like Yelp. The company Wealthtender makes use of the SEC’s lifting of the testimonial rule, which CEO Brian Thorp thinks advisors still aren’t taking advantage of. Even though testimonials have been allowed since 2021, only 9.3% of SEC-registered firms are using them, he said.

Into the Pod-verse. Podcasts can also be a key way for advisors to build out their Gen Z books, gain an online following, and establish credibility. Six out of 10 Gen Zers say that it’s “important that podcasts provide them with good tips and advice,” according to data from SiriusXM. Mitlin Financial founder Larry Sprung said his firm’s podcast — whose guests are asked what brought them joy that day — has helped the firm establish its core message and set itself apart.

“We started leaning into it. We created shirts… We feel like, especially in the world today, there’s so much divisiveness,” he said. “Joy is somewhat universal. It has resonated with a lot of people.”

Don’t believe everything you see on the internet.

It’s easy to seek financial advice online, and more than half of Americans do it at least once a week. But that convenience comes at a cost as about 60% of people say they’ve made decisions they later regretted based on bad information, according to a new CFP Board survey.

Many are cautious, with four out of five questioning what they see online, and only two in five believing it’s in their best interest. But even those working with professional advisors may still be tempted by tips from influencers or popular YouTubers, and it’s up to wealth managers to keep them hesitant.

“The sourcing has changed but this is the same as ‘locker room talk’ used to be in the ‘50s,” said Edward Thomas, a CFP with Savant Wealth Management.

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