Financial Hypochondria: When Investment Vigilance Becomes a Problem

Plan sponsors that offer financial wellness programs typically invest much care, time, and effort in improving employee financial literacy.

They offer educational content, provide opportunities for group and individual consultation, and encourage participants to approach retirement planning proactively by staying on top of their investments. But what happens when workers go overboard with well-intended advice?

Today, stock market data is available 24/7 with just a few clicks on links. And this development, in many ways, has been a double-edged sword. While it has made investing a lot more accessible for many, it’s become all too easy to fall into a pattern of checking portfolio performance daily — or even multiple times a day — especially after doom scrolling clickbait financial headlines during periods of heightened market volatility.

And this may not be helpful.

According to Frank Murtha, Ph.D., co-founder of MarketPsych, such behavior can create a myopic focus that may blur an investor’s long-term perspective. It could also lead to a state of heightened anxiety and the kind of cognitive errors that may result in faulty short-term financial decision making. When a health coach is working with a client, they motivate healthy behaviors, but not in the extreme. For example, the coach might recommend working out several times a week, though not several times each day. Similarly, participants should be encouraged to have a healthy amount of investment awareness, while avoiding extreme hypervigilance.

On the other hand, prescriptively dictating how frequently participants should check their 401(k) or 403(b) or governmental plan balances without addressing their underlying fears is shortsighted. It’s also unlikely to be effective, as such financial fears rarely stem from a mere lack of information. When an investor acknowledges and comes to terms with their uncomfortable emotions, they’re often better positioned to find healthier coping mechanisms for the uncertainty and risks that inherently come with investing.

At that point, things like providing a broader historical context for stock market performance and explaining how asset allocation and dollar cost averaging can mitigate risk become much more helpful. And it goes without saying that so long as investment strategy does not match up with investor risk tolerance, such work can remain a stubbornly uphill climb. But once participants accept that a certain amount of risk and uncertainty is necessary to reach financial goals, it becomes much easier to put a plan in place to better manage financial stress — whether that includes meditation, taking a walk or turning to a trusted friend or advisor.

In the end, it’s important to remember that investing decisions are ultimately emotional ones — centered on hopes and dreams for the future. And any financial discussion that fails to take that fundamental truth into account risks missing the forest for the trees.

Representatives offer products and services using the following business names: Summit Group of Virginia LLP – insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC – securities and investments | The Ascent Group, LLC – investment advisory services. AIC is not affiliated with Summit Group of Virginia LLP, The Ascent Group, LLC, or any other entity mentioned herein. Products and services are limited to residents of states where the representatives are registered. This is not an offer of securities in any jurisdiction, nor is it specifically directed to a resident of any jurisdiction. As with any security, request a prospectus from your representative. Read it carefully before you invest or send money. A representative will contact you to provide requested information. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

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