Changing Your Clients’ Behavior

Changing Your Clients’ BehaviorDo you wish your clients approached their financial goals proactively? Do you feel irritated when clients agree to follow your recommendations, but fail to do so time and time again? Are you frustrated and tired from working harder than your clients to increase their net worth?

If you answered yes to any of these questions, you are not alone. Many financial advisors feel some dissatisfaction, at times, when working with clients who have good intentions, but fail to take consistent action toward meaningful change in their financial lives.

Kathleen Burns Kingsbury, founder and principal of KBK Wealth Connection, a company dedicated to helping financial services professionals and their clients create wealth from the inside out, wrote, “The breakdown in the client-advisor relationship often starts at the first meeting. After methodically reviewing a client’s balance sheet, tax returns, investment portfolio, and current earning and spending patterns, you and the client meet. You ask about their financial commitments and personal plans, gently probing to make sure nothing’s overlooked. Based on concrete financial data and the client’s stated goals, you make some recommendations. For the most part, it is an intellectual exercise making you feel smart and helpful.”

“Now look at the same meeting from the client’s perspective. They may seem to be following along, looking at the data and nodding in agreement. While you are projecting potential income at the anticipated time of retirement, however, the client may be chastising himself for not taking action sooner, feeling overwhelmed by all the lingo and options, or visualizing himself on a boogie board in the Bahamas to avoid facing the financial facts laid out in front of him. In other words, the meeting is a very different experience for the client. It is not only an intellectual exercise, but also one which stirs up conscious and unconscious messages about money.”

Money is intensely emotional. It touches every part of our lives – from relationships to how we go about our everyday activities to our ability to make our dreams happen. “Acknowledging this and learning how to identify and talk with your clients about their conscious and unconscious reactions, and how to help them change their behavior to meet their goals, will reduce your frustration and have a positive impact on your clients’ financial status. The bottom line is: effective advisors grasp the complexity of money in their clients’ lives,” said Kingsbury.

Getting a client to think differently about money is not easy. Kingsbury suggests you “listen for clients’ money scripts.” A money script is a thought or belief about money, originally formed in childhood and based on how parents and other influential adults handled money.

“These scripts are partial truths and they can prevent us from reaching financial goals and dreams if unexamined. For instance, a self-made millionaire may live paycheck to paycheck because he has a money script which states, ‘Rich people are snobs.’ Unconsciously, he spends all he makes, so he never feels rich and, therefore, is not a snob. Only by making him aware of his money script and examining how this belief helps him and cripples him, will he be able to let it go,” said Kingsbury.

Financial expert Suze Orman agrees. In her book, The 9 Steps to Financial Freedom, she writes: “The road to financial freedom begins, not in a bank or even in a financial planner’s office, but in your head. It begins with your thoughts. And those thoughts, more often than not, stem from our seemingly forgotten past with money. I’ll go so far as to say in my experience, most of my clients’ biggest problems in life, today — even those appearing on the surface not to be money related – are directly connected with their early, formative experiences with money.”

To understand your client’s financial behavior, and help them change, means to first help them face their fears and then create stages of change. When people face their fears, they are able to create new truths, as Orman often talks about. “The trouble with fear is when we keep them inside and refuse to deal with them, they grow like weeds left alone in a garden,” she wrote.

To help identify fears, Orman offers an exercise in which the client [or reader] writes down the things they remember about money from their childhood: the best presents received as a child; what their friends but they didn’t; their parents fight about money, etc. On another piece of paper, clients write down their present-day fears. As they read their present-day fears, have them go back to their childhood list and see if they see any connections. It may take a while to connect the dots, but they are there.

In addition to altering attitudes about money, successful advisors help clients change their money habits. This is not easy. “For any of us to alter any habit we must go through a predictable process which involves realizing the problem, contemplating possible solutions, and eventually taking action. Clients who change their financial habits typically pass through five distinct stages: pre-contemplation, contemplation, preparation, action, and maintenance. Each phase is marked by certain money attitudes and behaviors,” said Kingsbury.

Pre-contemplation: Clients in the pre-contemplation stage are aware of the need to change, but are not motivated to do so. Often, they are being pressured by “significant others” to change their financial behaviors or are being forced to examine their financial situation as a result of an event, such as a death in the family, the birth of a child, or the sale of a business. They may say to themselves, “I should settle my dad’s estate” or “my wife and I should have a retirement plan,” but they have beliefs such as “settling the estate will be complicated and depressing” or “I’m too young to worry about retirement.” Individuals in the pre-contemplation phase defend the status quo and are not ready to make any substantial and lasting changes.

Contemplation:This stage of change is marked by ambivalent feelings. Clients in this phase may think they are ready to take action, see their financial ways as unhealthy, realize they have a problem, and may even hire a financial advisor. What they do not realize — and therefore cannot tell their advisor — is they have strong feelings about altering their spending, their saving and investing habits, and their equally strong feelings about not altering them. For example, a client may say she wants to save more money, but her spending habits, and therefore her savings account balance, remain unchanged. Intellectually the client wants to increase her savings, but emotionally she continues to spend, since it is familiar and comfortable. Because taking action is hard in the short run, she continues to think about making change in the long run, but does not make any concrete shifts in her day-to-day financial behavior to achieve her goal.

Preparation:Preparation is marked by a clear commitment to change. In addition to working with you, clients at this stage may read financial books, magazines or blogs; talk to friends about investing; take financial literacy workshops; or actively engage in planning discussions. Also known as the determination stage, this phase is marked by statements such as, “I will do better managing my money,” “I will listen and follow your recommendations,” and “Tell me what to do and I will do it.”

Action:Most clients (and advisors) want to be in the action stage from the start, as it involves taking steps such as debt reduction, budgeting, and conscious financial planning — steps which reinforce clients’ beliefs in their ability to make positive shifts in their financial lives. Clients usually need to work through the other stages of change, however, in order to truly be ready for meaningful action. Research shows clients spending less time in this phase than any other. You can expect clients to be in this stage for as little as an hour or as long as six months.  

Maintenance:After clients have altered their money habits, integration of their new behaviors is the primary goal. It is important for clients to avoid temptations and be aware of triggers which cause them to revert to their old behaviors. At this stage, clients should anticipate problematic money situations and how to handle them differently than in the past. Old money messages may pop up again. Helping clients follow good investment practices and reminding them of their progress goes a long way, at this stage.

In addition to working with your clients, there are some apps which can help you nudge your client in a better direction.

Stickk, which aptly tags itself as the spot where “Change Starts Now,” lets users sign an online contract for any goal they want to meet — say, avoiding carbs, completing a Bachelor’s degree, learning to speak German, or sticking to a budget and getting out of debt.

Co-founded by Yale economics professor Dean Karlan, Stickk’s premise is based on research around “commitment contracts” tools Karlan believes can help people achieve those goals by giving them tangible incentives.

The free service starts with users signing their own contract, and then setting financial stakes — perhaps a certain amount of money triggered to charge to a credit card, which is then sent to any recipient. Perhaps, the user points the potential cash to a political cause they intensely dislike. The motivation is there to stick to their goal. Users select a referee, such as a friend, family member, or financial advisor, to monitor the progress and keep them honest. Or they can go it alone, pacing themselves until a deadline is met. It brings a more tangible, real-world incentive beyond simply having clients make promises to themselves, which are too easy to break because no one else is watching.

Similar to Stickk, Beeminder forces users to make a commitment to a goal — along with setting certain progress points which must be met each week. Here, falling off track requires a payment to Beeminder —a more powerful incentive. It’s almost like Beeminder is betting on users’ failure. Stickk users may choose their children get the reward, if they fall short of their goal, but Beeminder users pay their taskmaster and it’s a little more distasteful.

Reviews of Beeminder are fairly high on both the Google Play store and Apple’s App Store, and it is free — as long as goals continue to be met. Beeminder does require some self-honesty. — No one checks if someone cheats on their updates. If you’re cheating yourself, however, there may be bigger issues afoot.

Advisors never like telling their clients that a kitchen upgrade isn’t the best choice, right now—or worse, visiting the grandchildren should be postponed. Instead, they could let Planwise do it for them. The app helps users visualize how financial choices affect their bottom line.

Users enter several choices in the app, and the app projects how financial decisions, today, affect savings in the future. While not as focused on changing long-term behavior, seeing future account balances dip, from purchases made today, can be powerful. Free for consumers, Planwise can also be embedded on an advisor’s site for a fee.

For more information on Summit Brokerage Services, visit or contact us at (800) 354-5528.

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