Did post-traumatic stress disorder lead huge numbers of brokers to make bad investment decisions on behalf of customers in the aftermath of the 2008 financial crisis? According to a recently published study from an academic journal called, "The Journal of Financial Therapy" (who knew such a thing existed!), it seems entirely likely they did. The study is based on a survey of financial advisers across the industry, “Financial Trauma: Why the Abandonment of Buy-and-Hold in Favor of Tactical Asset Management May be a Symptom of Post-Traumatic Stress," and according to an article in MarketWatch the survey found that 93% of financial advisers and planners admitted they'd wrestled with PTSD following the crisis. That's not all, though. Shockingly, fully 40% of respondents to the survey said they had suffered severe PTSD symptoms. The respondent pool was responsible for anywhere between $20-$40 million in assets.
In order to qualify for a clinical diagnosis of PTSD, one must exhibit symptoms including sleep disturbance, high stress levels, anxiety, difficulty concentrating, and self-doubt for a period of more than one month. Many of the financial advisers who took part in the survey claimed that their symptoms continued for far longer than that--in some cases, for years afterward. Moreover, the study shows a correlation between the brokers' PTSD symptoms and a widespread shift in investment strategy over a period of a few years.
Although we sympathize with brokers who suffered personally during one of the worst financial crises in history, we tend to sympathize more with the customers whose life-savings simply vanished during that very same crisis, and who, we're quite sure, experienced their own form of PTSD or worse.
One psychologist quoted in the article mentions that PTSD sufferers tend to engage in very risky behavior like "substance-abuse, aggression, and thrill-seeking." Indeed, at The Green Firm it has been our experience that a surprising number of brokers reeling from the financial crisis have demonstrated such erratic behavior in its aftermath, often at the expense of customers who had already suffered losses due to the market's collapse. No matter how much sympathy we accord to brokers suffering from PTSD, they are still professional investors, still responsible for our money, and they still have supervisors who should be monitoring them for symptoms associated with PTSD as with any other condition that causes them to be unable to do their job.
If you or anyone you know has been the victim of broker misconduct or any other form of investment fraud or negligence, please contact us immediately for a free consultation.