From the July 2010 issue of Boomer Market Advisor • Subscribe!

The retirement question is the answer

"Mary, you need to cut back on your spending. You won't have enough to stay retired." This well-meaning suggestion represents the traditional approach to financial planning: first, find out what clients want and then tell them what they need to do to achieve it. This works great...in theory.

Unfortunately, the human mind rebels against such suggestions for change. Think of it as a tug of war. At least a part of Mary's brain knows she needs to save more, but it has been losing the battle with the much stronger part of her brain that wants to keep spending. When you join the save-more side, the stronger, keep-spending side tends to fight back harder (or it simply plays dead until a financial advisor is no longer around). So what is the answer? Ironically, the question is the answer.

Professor of organizational development David Cooperrider has studied this effect throughout his career and has found that we "move in the direction of the questions we ask." While the mind may resist suggestions, it powerfully engages with questions. Luckily for us, it can't help itself.

But Cooperrider cautions us against asking traditional questions such as, "Why do you think you spend too much?" or "What do you think will happen if you keep spending so much?" These questions only address a problem, not a solution. Instead, Cooperrider clarifies that the art is to ask questions that lead your clients in the direction of their goals; in other words, ask:

  • "What in the future could be so exciting or motivating for you that it would make you yearn to put money away for it?"
  • "What in the past has allowed you to save successfully, even if it wasn't intentional?"
  • "What techniques have you seen others use that allowed them to save toward their goals?"

Asking clients these forward-moving questions allows them to find their own answers, which actually compels them to act (and you don't have to get frustrated when your brilliant suggestions are ignored).

When it comes to helping clients achieve their goals, there are three categories of questions. First are questions that clarify the goal; second are questions that motivate action toward the goal; third are questions that help clients find the right steps to take or find the confidence that they can successfully take those steps. These questions might sound like this:

  • "If you were able to eventually buy a second home on the beach, what activities would you most enjoy doing with your grandkids?"
  • "What would you like to devote your time and energy to if you didn't have to work?"
  • "What strengths do you have that could help you take the steps you're looking to take?"

Taking a dose of my own medicine, let me seriously ask readers; if you could choose one client to try this with, who would it be? Take a moment until you think of one particular client. Now think about the direction in which he or she needs to go. What could you ask that would increase that individual's desire or motivation to move? What questions come to mind that would strengthen that individual's confidence in his or her ability to move? And, finally, what will you do with all of the great referrals that come from this now-forever-loyal client?

Kol Birke is a financial behavior specialist at Commonwealth Financial Network(R), member FINRA/SIPC and a registered investment adviser, in Waltham, Mass. He has a Master of Applied Positive Psychology from the University of Pennsylvania. What powerful questions do you have for Kol? He can be reached at kbirke@commonwealth.com.

Reprints Discuss this story
This is where the comments go.