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Financial Planning > Behavioral Finance

Financial Planning Clients Exhibit Same Behavior as Weight-Loss Patients

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Striking similarities occur in the behavior of individuals trying to lose weight, stop drinking and those at the beginning of the financial planning process. Learning to properly address one has positive implications for others, according to Karen Miller-Kovach, Chief Scientific Officer for Weight Watchers International.

At the 2011 FPA Retreat in Bonita Springs, Fla., last week, Miller-Kovach examined the science of weight-related behavior change through psychographic segmentation and offered communication techniques that work when attempting to lose weight, or stick with a financial plan.

“There are obvious parallels between weight-related behavior and financial-related behavior, or any systems that involve humans, for that matter,” said Miller-Kovach. “But there are huge differences between knowing and doing.”

Part of the problem, she explained, is that professionals are taking increasingly educated clients and asking them to change. Trends in weight loss include an obesity epidemic in the United States; however, interest in losing weight is declining even as the understanding and awareness of obesity is increasing, a prime example of knowledge versus behavior, or knowing versus doing. People care less as obesity becomes more acceptable in society.

This type of challenge is best addressed through segmentation, or the study and application of how different audiences receive information.

“Segmentation means psychographics are far more important than demographics,” she said. “Demographics tell us little about a given population. By using segmentation, it allows us to specifically target who we want to answer questions and challenges. Psychographic segmentation is much more predictive of behavior that demographic segmentation.”

She offered six of psychographic segments that are identified in weight-loss behavior (or financial planning) and each must be approached differently in order to motivate clients to act:

1) Empowered lifestyler – Their goal is to live well, feel well and be well. They are not looking to achieve a specific number on a scale. It is more about the overall experience.

2) Methodical manager – They will focus on the process. They cannot have enough checklists. The more tasks they are given, the happier they are.

3) Trendy short cutter – They love trendy fads, and use these fads to supplant actual work.

4) High-touch hopeful – They want help; they need help, and with this comes a need for a high-level support. They are the antithesis if the methodical manager, and as Miller-Kovach said, their life is a mess.

5) Prisoner of weight – This person surrenders; they’ve convinced themselves they’ve tried everything and nothing works.

6) Pleasantly plump – Sure, they’d like to lose weight, but they are happy enough if it doesn’t happen.

“They key is to understand the approach to each segment so as to affect positive behavior,” according to Miller-Kovach. “Weight loss is a journey, not a linear path but circular. Motivation typically falls off from dedicated, to ‘not top of mind,’ to casual and then back to dedicated. A sense of urgency will bump a person up in the cycle.”

Motivational triggers include clothes (can’t fit into those jeans), and event (that high school reunion) or a health scare. But just as there are triggers to motivates, there are also triggers that derail, which include the fact that “life happens” and we just can’t get to it; vacations; or, a schedule change.

And with any task like weight loss (or financial planning), success rarely happens on the first try. A rededication on the part of the client makes them more realistic because they learn from previous experiences.

So what can be done?

Miller-Kovach listed five stages of change:

1) Pre-contemplation – Change is not being considered. As an example, most men are obese before they even consider it time “to lose a few pounds.” The challenge at this stage is to create awareness.

2) Contemplation – The most important stage, and one where most people spend the most time.

3) Preparation/Planning – The most neglected stage. Pushing action without preparation invariably leads to failure.

4) Action – Usually two to four weeks occurs from preparation to action, if it happens at all. As so and so notes, “there’s always another Monday in the world of weight loss.”

5) Maintenance – Once action is taken, regular maintenance must occur to prevent a falloff from the dedication stage in the cyclical process.

In the contemplation stage, a sense of importance and a sense of confidence must be present, and they must be equal. Alcoholics have a high sense of confidence and a low sense of importance, they can “quit anytime.” Smokers have a high sense of importance and a low sense of confidence in success; “I really should quit, but can’t.”

“A motivational environment is one in which the chances of members having the kind of realization that affects them to change is maximized,” she said. “There should be four key questions asked: What would they like to happen; what needs to happen; can they; will they?”


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