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Life Health > Life Insurance

How to Help Clients Through the 4 Stages of Major Life Transitions

By Jane Wollman Rusoff

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By virtue of being mortals, human FAs — unlike robo-advisors — are equipped to focus on human dynamics to create deep client relationships. Alas, most advisors don’t seem interested in, well, being so human. So says Susan Bradley, former FA and founder of the Sudden Money Institute, in an interview with ThinkAdvisor.

Still, she’s out to change the financial services profession to be “a true collaboration of human beings,” avows this authority on how to help clients cope with big life changes.

It is indeed the personal side of financial advice that drives client decision-making and creates stickier FA-client relationships, Bradley argues.

An advisor for nearly 25 years, she pioneered and addressed the notion that people experiencing a powerful life change, like losing a spouse or selling a business, require more from their advisors than just traditional financial planning.

First, she co-wrote a book, “Managing a Financial Windfall” (Wiley 2000) and the same year it was published, founded the Sudden Money Institute. Next, she created the Certified Financial Transitionist designation and its training division, the Financial Transitionist Institute, which has certified about 100 CFPs to use its structured process.

In the interview, Bradley discusses the four stages of transition and the institute’s technique to help clients going through crises make effective decisions and avoid making lousy ones.

A frequent public speaker, Bradley’s calendar highlights upcoming presentations for the Certified Divorce Financial Analysts (CDFA), Transamerica and the spring conference of the National Association of Personal Financial Advisors (NAPFA). She is just back from training CFPs at the RIA Summit in Mumbai, India.

A CFP since 1982, Bradley worked as an independent advisor for a decade, then joined Raymond James on the employee side for another 10 years. She sold her practice 15 years ago to focus on Sudden Money full time.

Think Advisor recently interviewed the native of Ridgewood, New Jersey, where she grew up with nine brothers and sisters. Speaking by phone from her Palm Gardens, Florida, office, she chatted about helping clients negotiate life-changing events, including how a “decision-free zone” can act to remedy “transition fatigue.” She also maintained that FAs aren’t being “buttinskies” if they suggest small social changes to expand clients’ lifestyle and well-being.

Here are excerpts from our conversation:

THINKADVISOR: Why do people have significant financial issues when going through big transitions?

SUSAN BRADLEY: Even if the [amount of] money doesn’t change, it might be about the responsibility or the way the money is used. That doesn’t lend itself to just traditional CFP good financial planning. The other element is that the driver of decision-making is the personal side. It takes much more effort than behavioral financial people want to assume because it’s more than information.

What’s financial services doing to help clients in this situation?

There’s an awareness that this is probably where the money is. So the industry says, “Go after women — they have the money. Ask them a bunch of questions because ‘they’ really like that.” But that’s just fluff.

However, haven’t advisors evolved into veritable financial guides vs. salespeople?

Yes — because the client has evolved. They’re more financially literate on kinds of services that are available. So clients vote with their feet. If they don’t like it, they have choices and can move. They talk with one another. One widow told me she’d been working with an advisor for five years, when a neighbor became widowed and asked her about him. She said: “Oh, no, don’t go to him. He never listens to you!” So she left that planner, and she and the neighbor went about interviewing several others.

Is your hope or expectation that most FAs will learn how to develop the personal side of advising to help clients more during a big life change?

It will never be the majority. It’s just not going to happen. It’s too much work. It does pay off; it’s probably where the money is. It’s where the satisfaction is. But it takes extra training, and the industry just doesn’t see [the need]. The majority of advisors don’t really care enough.

You offer the Certified Financial Transitionist designation. What do advisors who earn it bring to the party?

We integrate the technical and the personal. The personal side is how you connect with people so that you [can be the FA] for future generations. You’re helping [align] their money [with] the shift in their lives so that after an event, they really thrive rather than just survive.

What comprises “the personal side”?

A very deep understanding of human dynamics. When taking people through repositioning their finances when their life is changing, [Financial Transitionists] are coming at it knowing the [four] stages of transition that they’re struggling with. They can accommodate traits like anger, brain fog, and feeling overwhelmed. So, for example, they’re slowing down meetings, talking about one thing at a time, having shorter meetings.

Is it essentially listening to them and being supportive?

It’s more than that. You’re understanding that the client is having a very strong personal experience and giving them a process to be more aware so they can make decisions from the inside out.

What are the four stages of transition?

The first is Anticipation. You see an event coming and start to build it into your thinking and commitments. If could be something planned for, like retirement, or a spouse that’s ill or some disruption in your industry that makes your position questionable.

What’s the second stage?

The Ending. This when the event has happened and the pieces of life — personal and financial — are, kind of, coming apart; and you have to put them back together. People are stressed and overwhelmed. The advisor needs to manage both the technical and personal sides.

What’s “transition fatigue”?

People frequently have overlapping transitions: They might retire and then have a major health concern; and then, maybe, their aging parents need a whole different kind of assistance from them. All that’s happening within two years of retirement. They’re worn down physically, mentally and socially by these uncertainties. That’s when they get exhausted and overwhelmed — and make regrettable decisions.

What are the third and fourth stages of transition?

The third is Passage. That’s the time when people are adjusting and adapting to their circumstances. The fourth stage is the New Normal, when you’ve completed the transition. A widow, for instance, no longer [identifies primarily] as a widow. She says, “I play golf in Florida.”

So is all the work over at that point?

No. In the last stage, we need to go back and look at what worked and what didn’t so that the next time life changes — and it will — the advisor and client have a starting place: This is what worked in the past, and this is my starting place going forward. [Using this approach], the stickiness of the client just cannot be overstated.

Many advisors fall short in the empathy department — putting themselves in another person’s shoes. But you need empathy to help clients on the personal side. Can they develop it?

Yes. But without a structure and process [for the transition], they’re just relying on having a good hair day or the client’s liking them or the client’s being passive. That’s just hit-and-miss stuff.

What is the “decision-free zone”?

After a life-changing event, people are overwhelmed with the many decisions they have to make and start pushing their way through making them. It isn’t enough to tell them to slow down. You have to show them how. So, together with the client, the FA [needs to] divide things on their mind into three categories: ”Now,” for urgent things; “Soon,” for everything else that’s important but not urgent; and “Later,” things that the client hopes to get to that are a year or so away. The advisor is helping the client make one good decision at a time, a logical way to increase capacity.

What else can FAs do on the personal, human side to help clients during a big transition?

For instance, they can assess and talk about isolation and hibernation because a lot of people [in this circumstance] go into a cave. A planner can ask: “What’s your routine like? How many times a month do you see people?” Then, perhaps, they can say: “I have a client who goes to a class once week and seems to love it. Would you like me to get information about it for you?”

Isn’t that being nosy — a bit too personal?

No. This is a legit conversation from a financial planner point of view. You’re not being a buttinsky.

— Related on ThinkAdvisor:

Jane Wollman Rusoff

@jrusoff2

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