As all advisors know, it’s one thing to provide clients with appropriate advice and another thing to actually get them to follow that advice.
In this series of reports, Investment Advisor columnist and psychotherapist Olivia Mellan and financial behavior specialist Kol Birke of Commonwealth Financial Network address some common scenarios that advisors face in getting their clients to follow through on their advice. This advice for advisors flowed out of a web seminar hosted by Investment Advisor and ThinkAdvisor editor Jamie Green late last year.
Scenario 3: Persistent Self-Sabotage
Jamie Green: A number of questions submitted by webinar attendees have focused on clients who persist in self-sabotaging behavior.
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How do you deal with a client who chronically sees the glass as half empty, no matter how secure their financial life really is? Or who sits on cash while they wait for the perfect investment? Or who constantly wants to change their portfolio because of some current event like Twitter’s IPO? Or who can’t seem to make a decision, even when it’s in their best interest to do so?
Kol Birke: When it comes to motivating clients, you generally want to bring down the barriers to action. You want to make the decision easy, and bring up the consequences of not doing what’s in their best interest.
I’d add that one of your secret weapons as an advisor is your own emotions. What I mean by that is that when a client is overspending they know that they are potentially impacting their family, but they don’t necessarily know that they’re impacting you. If the advisor says to the client, “Listen, I really care about you; I want your life to be financially healthy and stable. But the night before we meet, I had trouble falling asleep because I’m worried about you,” it shows the client that A) you care and B) they’re impacting you. I’ve used this approach with only about five advisors, but I’ve had 100% success with it. More than anything else I’ve seen, it has prompted the client to act—to view things more positively, to not jump on that Twitter IPO or whatever it is.
I’ve also had advisors who’ve said to the client, “Listen, I really care about you, but I don’t enjoy meeting with you because you are constantly trying to jump to the next big thing or because you’re always worried about the economy or the world collapsing. The clients I really enjoy working with exhibit X, Y and Z type behaviors. Is that something you’d enjoy doing? Is that something we could work on together?”
Sharing your emotions in this way is a super-gutsy move, and I’m not trying to convince you to do it. But so far I haven’t seen anyone fail at it.
Olivia Mellan: I’ve had Kol’s wonderful idea about “I was up last night worrying about you” in my own toolkit ever since I interviewed him several years ago. When used in the right framework, it’s really brilliant.