Articles About Client Trust & Communication

Financial advisors may often work with clients struggling to implement changes recommended by their financial plans. For many of these clients, moving forward can be difficult for a number of reasons. Fortunately, the Transtheoretical Model (TTM) of change is a research-based framework that gives advisors strategies to use with their clients who may be resistant to change. While the first stage of TTM is Pre-Contemplation, where clients may not yet have the awareness that change is important to their plan, the second stage of the TTM of change is known as the Contemplation stage. In this stage, clients have acknowledged the need for change and are beginning to think about the action needed to implement change. Perhaps more importantly, they begin to consider their own ability to carry out that action and what the action actually entails behaviorally (e.g., saving more) and emotionally (e.g., cutting down on buying new shoes, ordering coffee, and planning expensive vacations).

Like the other stages of TTM, the Contemplation stage has specific hallmarks. For instance, clients in this stage tend to display behavior characterized by what are known as the “two D’s”, Doubt and Delay. Clients may get stuck in this stage because they Doubt they have the requisite ability or knowledge to implement change (e.g., they may think that they can’t understand finances or that they don’t know enough to actually tackle the actions required), which can end their progress moving forward. Clients in this stage may also tend to Delay their progress. While Delay can sometimes be attributed to Doubts, fear of the future is another common reason for clients to Delay. Those who are stuck in the Contemplation stage must resolve their issues with Doubt and Delay before they can successfully move on to the next stage of change.

Financial advisors seeking ways to work with clients stuck in the Contemplation stage may find that worksheet tools, adapted from original research by James and Janice Prochaska, can be a useful way to help clients overcome resistance and gradually move through the next stages of change to accomplish their desired goals. These worksheets focus on reducing the negative ‘cons’ that clients have associated with the change and that hold them back from moving forward. They also aim to emotionally activate the clients by helping them understand how the impact of their actions affects others around them. These tools offer an easier, systematic process, so there is less guesswork for the advisor when trying to figure out how best to help clients move forward into the Preparation stage.

Ultimately, the key point is that there is a systematic process of implementing change, and by applying the research that's based on TTM, advisors can better understand what specific issues their clients may be struggling with and help them overcome these barriers. Additionally, with the aid of TTM worksheet tools designed for use with financial planning clients, advisors can more easily facilitate client discussions exploring goals and challenges, and encourage their clients to move through the stages of change with greater ease and self-awareness!

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Advisors hear them all the time: empty promises for change. And it is a struggle. It is a struggle for the client because they know they want to change and are paying their financial advisor to help them with that change. Yet, they do not move forward. It is also a struggle for the advisor because it is confusing and uncomfortable to ‘fight’ with a client about making a change when the client themselves was the one who said they wanted to implement the change… and now they just want to argue about seeing it through!

Yet, what the financial advisor and client are both often oblivious to is how change happens. And this is no one’s fault – no one teaches the Transtheoretical Model (TTM) of change except for psychology professors (although even 3^rd graders would benefit from learning about how to change – advocating for a better understanding of the change process would create a more change-friendly world!). But without understanding how change happens, it will be challenging to work with clients and figure out how to make it happen.

In the Transtheoretical Model (TTM), Pre-Contemplation is the first stage of the change process. In this stage, clients might not be aware that change is important, or more likely, they have identified the change and might even be able to recite a ‘why’ or two (e.g., retirement sounds fun… someday), but they still have no intention to see this change through (e.g., I have no intention to actually stop going out for coffee or to set up a savings plan). In other words, Pre-Contemplators not only don’t change… they aren’t even really thinking about what it would take to do it.

The central issue in the Pre-Contemplation stage is that clients often get stuck and resist change, even when they acknowledge they should change. Which can be confusing (and frustrating!) to the financial advisor after having just heard the client claim they want to implement changes to reach their goals, followed by the client actively defending their current behavior instead of working to implement the change!

So what should financial advisors do? Arguing with the client generally won’t help. And many times, more client education won’t help either. Enter James and Janice Prochaska, the authors of Changing to Thrive, who have written about what people need at each stage of the change process. Individuals in the Pre-Contemplation stage often feel ambivalent and are probably feeling somewhat disheartened by earlier attempts to change. This can result in anxiety over trying again, and defensiveness of current behavior to avoid having to try again.

The Prochaskas suggest some strategies that advisors can use to help clients, such as coming up with positive reasons for change (instead of the negative outcomes from not implementing the change), educating not on the ‘what’ but on the ‘how’ (because clients often don’t know what exactly they need to do), and spending time addressing clients’ deeper motivations for changing. The Prochaskas also developed worksheets to help people engage in change, which can be easily adapted to address changes that financial planning clients may need to make. These can give advisors a process-oriented strategy to address their clients’ issues, and can make having these potentially sensitive conversations with clients less intimidating.

Because the key point is that while change can be hard, it does have a process to it. If financial advisors understand the change process and what their clients are working toward, then they can implement a systematic way to discuss change with their clients. And by recognizing that action is not yet required in the Pre-Contemplation stage (instead, it is just about recognizing the importance of change and moving toward the Contemplation stage), advisors can help their clients more easily accept the changes they need to make. Change still won’t happen overnight, but that is okay. By guiding their clients through the steps of the change process, advisors will feel less confused and more empowered in their conversations with clients, and clients will be more likely to accept (and eventually take action on) the changes they need to make!

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Even though clients seek out and hire a financial advisor to obtain recommendations they can implement to achieve their financial goals, in practice clients often get stuck and resist taking action or making a change when the time comes. Sometimes the resistance might be based on cognitive or emotional biases, and other times it can be due to a lack of understanding or education about why the change is actually necessary or appropriate. Though in practice, with the range of potential reasons for clients to be resistant – despite having hired the advisor for advice in the first place – it can be confusing and difficult for financial advisors to know what to do to actually help the client move forward.

To help clients get over their resistance, advisors can use methods such as nudges, smart heuristics, and behavioral coaching. These methods have been designed not only to help advisors understand the client’s resistance but also to give them options for addressing the many reasons for the resistance, in a manner that aligns with both the client’s needs (as not everyone may need – or even want – behavioral coaching) and the advisor’s own capacity (advisors may not feel comfortable engaging with all of the available methods, and the time it can take in client meetings to do so).

Nudges are used to help automate processes and tasks for clients (e.g., those that clients must implement on an ongoing basis, such as automating monthly savings with a “pay yourself first” approach). They work best with clients who agree that the action is important and necessary, but who may simply need or want reminders or other mechanisms to help ensure the tasks get done. For clients who aren’t yet sure how to assess whether an action is necessary or important, advisors can use strategies involving smart heuristics, which are less about completing tasks and more about helping clients understand the issue so that they have the ability to engage in meaningful discussions with their advisor. Smart heuristics rely on ‘just-in-time’ teaching, which offers education on topics that the client is currently considering, and thus may find more relevant and meaningful.

For clients who have issues with resistance that stem beyond motivation or understanding, such as emotional biases or personal feelings, advisors can consider using an approach that involves behavioral coaching. Behavioral coaching helps the advisor guide the client to examine how their own emotions and thought processes impact their decision-making. For instance, many clients may be afraid to take action on their financial plan for fear of making a mistake. Accordingly, it is normal for them to hesitate out of fear, anxiety, or ambivalence when making financial decisions. Behavioral coaching can help clients overcome these roadblocks by slowing down to discuss the client’s hopes, dreams, fears, and concerns to ensure their plans are well-rounded and suitable for them. Because while it is important for a plan to be based on technically sound recommendations, the client needs to feel good about the plan and be on board with the recommendations in order for it to matter in the first place.

In order for advisors to choose which strategy to use with clients and when each strategy would be most effective, advisors can turn to a ‘decision tree’ model developed by Sarah Newcomb and Richard Cummings. The decision tree organizes nudges, smart heuristics, and behavioral coaching into a hierarchy that can be applied to each client’s circumstances, and sheds light on when to use one strategy over another. While nudges are helpful to simply remind clients that something needs to be done, smart heuristics can help clients understand an issue so that they can decide for themselves whether they want to take action. If neither a nudge nor a smart heuristic is sufficient to address the client’s resistance, behavioral coaching can help the client understand and work through deeper personal roadblocks.

Ultimately, the key point is that advisors have an arsenal of tools to help them work with clients who are struggling with resistance – stemming from a range of sources – that impede their progress in achieving their financial goals. By developing a plan of action implementing these tools with their clients, advisors can shed light on interesting and insightful details that can potentially result not only in the advisor creating an outstanding financial plan suitable for the client, but also in the client taking ownership over their plan and achieving their financial goals!

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Financial advisors often have clients who are too busy to deal with many of the numerous tasks that are required of them by their financial plans, as their cognitive and/or emotional plates are filled by the issues that take priority in their daily lives. In these situations, advisors can use ‘nudges’ as decision-making aids that automate processes for clients, simplifying routine tasks and helping clients to sidestep potential struggles with willpower, rewarding them with quick results with minimal effort… which, in many instances, is exactly what clients want!

Yet, while nudges can be very useful tools for helping clients to take action, advisors who rely on using nudges with their clients – but who also want to educate their clients – may find themselves challenged to find opportunities to explain the larger reason of ‘why’ behind the financial plan. This is because the primary utility of nudges is often simply to help automate tasks, not necessarily to educate clients. In fact, nudges are often effective precisely because they bypass the parts of our brains that require conscious thought! But without getting educated on why they need to do what their financial plan says is important, clients may ultimately struggle with developing the resiliency and financial self-efficacy that can be crucial to staying the course prescribed by their financial plans in the long run.

However, the reality is that not all nudges are designed equally – there are some nudges that can still be used effectively when the advisor’s intent is to educate clients. There are two dimensions used to characterize nudges, which include Type and Transparency.

Nudge Type refers to the level of conscious thought required to carry out an action; it includes Type 1 nudges (involving automated processes and subconscious decision-making) and Type 2 nudges (involving deliberative action and conscious thought). Nudge transparency, on the other hand, refers to whether the intention behind the nudge is communicated and made clear to the client; the intention of a Transparent nudge is made clear to and is understood by the client, while a Non-Transparent is not.

The significance of understanding nudge types and transparency is that while advisors can effectively use Non-Transparent nudges to support their clients by automating simple tasks, it’s the Transparent nudges (whether they are Type 1 or Type 2) that still force at least some level of conscious thought about the nudge, thereby fulfilling the advisor’s objective to not just help clients change their behavior but educate clients so that they truly understand how their financial plan recommendations are, in point of fact, designed to support their financial goals!

Ultimately, the key point is that, by understanding the psychology behind different styles of nudges, advisors can use these tools to help their clients achieve their financial goals… and still help clients get educated and understand the ‘why’ behind their financial plans. As while some recommendations can be simply nudged to help clients take action with minimal thought and with little regard to the underlying processes (e.g., to set up monthly savings deposits), others necessitate clients learning and accepting the reasons for the things their financial plans require of them (e.g., to review and discuss potential portfolio allocation changes). And with the ability to discern not just when to implement nudges, but also which types of nudges to use, advisors can better match the approach to when clients just need help getting something done, and when there’s an opportunity for them to get better educated along the way (and build their financial resiliency and self-efficacy in the process)!

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One of the most common challenges that financial advisors can face is encouraging clients to implement recommendations when they are resistant to the idea of change… even when the client is aware that those changes are necessary to attain their goals, and even when they want to make those changes! For many clients, resistance is fueled by behavioral biases that hinder their ability to think rationally as they consider a potential change to implement, which in turn can also create friction between the advisor and client in discussing the required changes necessary to accomplish their goals. But by understanding the communication tools that help their clients work through resistance, advisors can enhance their relationships while, at the same time, helping their clients actually take the action steps necessary to follow through on their recommendations!

Behavioral biases can impede rational decision-making by causing a person to discount or ignore relevant and important information. This can happen because of how an individual might subjectively accept and process information (e.g., confirmation bias causes important information to be dismissed because it contradicts a person’s preconceived notion, which a person may not even recognize is incorrect), or because of how moods and feelings about circumstances or relationships can influence thinking (e.g., the endowment effect might cause a client who is emotionally attached to a home that they need to sell to ask for twice the market price of the home).

When helping clients who are resistant to implementing important changes because of behavioral biases, financial advisors may find certain forms of reflection useful to help clients overcome the resistance. Reflection is a conversational tool that is often used by therapists to help patients work through change and accept resistance as a natural part of the challenging process of personal change. These same tools can also be used just as effectively by financial advisors with their clients, because resisting change – even when the change is one that we want to make – is normal, and very common, for nearly everyone.

Because in the end, arguing with a resistant client about why a change is necessary, and presenting data and financial planning projections to prove the point, can actually just make the client more resistant (and may even result in getting the advisor fired!). Whereas the act of reflecting, which can be as simple as reiterating what the client has just said about how they feel, can create positive opportunities for objectively brainstorming new ideas and gaining insight – for both client and advisor – around the thoughts and feelings on successfully moving forward.

Ultimately, the key point is that resistance from clients is normal and very common, but arguably the point that the client needs to make the change is rarely the best way to accomplish the goal. Instead, the best ways to help clients move forward can often be found by offering the client the time and space to reflect upon their own thought processes. And fortunately, advisors have a range of different conversation tools to choose from that help their clients break through and implement their recommendations… in addition to deepening the advisor’s relationships with their clients, too!

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Many financial advisors find that expressing empathy can help them to bond with and strengthen their relationships with clients. Yet, while becoming emotionally invested in clients’ personal experiences can be an effective (and often enjoyable!) way for advisors to establish close relationships and friendships with them, when clients experience difficult and even traumatic experiences (e.g., panicking in response to extreme market volatility, or suffering from the loss or plight of a loved one), advisors may find themselves sharing the same emotions as their clients… such that they, too, suffer emotional distress, to the point that their own emotional well-being becomes jeopardized.

Notably, though, there are different forms of empathy, some of which don’t require experiencing the other person’s emotions. As while emotional empathy does involve personally experiencing the same emotions as someone else, cognitive empathy involves simply understanding the level and significance of someone else’s emotional experience, but on an intellectual level (sometimes referred to as ‘emotional intelligence’), without necessarily experiencing those emotions. And when coupled with compassion (which is a “concern to enhance the welfare of another who suffers or is in need” and which motivates us to take action to help someone), cognitive empathy can become a valuable tool for financial advisors to understand and help clients without experiencing the same emotional highs and lows their clients may be experiencing.

Another important caveat of emotional empathy is that it is often limited to individuals with whom we consider similar to ourselves; accordingly, if someone isn’t similar enough to us, we just might have less emotional empathy for that person. Which is important, as advisors who lead with empathy can unintentionally narrow their client base to only others who are similar to themselves, and actually make it more difficult to connect with other types of clients.

Advisors who want to connect with their clients, but reduce the emotional toll of an emotional empathy approach, and instead seek to implement more cognitive empathy and compassion into their client meetings, might consider exploring practices adopted from Compassion-Focused Therapy (CFT). What’s unique about the CFT approach is that it focuses on helping clients not just trace the past to how they arrived where they are, but instead to identify their strengths, current abilities, and their present opportunities, in order to identify ways to comfortably move forward through specific challenges they may be facing. Compassion-Focused Therapy can be especially helpful when working with clients in distress and is designed to support clients and accomplish change.

Ultimately, the key point is that advisors can employ cognitive empathy to connect with their clients by understanding what they feel, yet without necessarily experiencing the same emotions as their clients that can take a real emotional toll. And by practicing compassion, advisors can take the insights gleaned from cognitive empathy to take action to help and support their clients productively, with confidence that the help they are providing to their clients is not clouded by the emotional burdens they may have taken from their clients!

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While entrepreneurs are often renowned and celebrated for their willingness to take risks – to the point that encouraging someone to “be more entrepreneurial” is an analogy for taking more risks – the reality is that research shows entrepreneurs often consider themselves otherwise. From the entrepreneur’s perspective, though, what they do doesn’t necessarily seem risky – at least to themselves – because of the confidence they have in their own abilities (i.e., a belief that they will be able to navigate whatever challenges arise). Yet if entrepreneurs aren’t actually necessarily risk-takers – just very confident, or perhaps even overconfident – the question arises: what’s the best way to counsel an entrepreneur through the risks of their financial decisions if they don’t recognize those risks in the first place?

The large scope of what it actually means to be an ‘entrepreneur’ (e.g., from a goat farmer in a tiny third-world-country village to a solo divorce attorney in a large metropolitan city), and the variability in risk tolerance measurement methodologies that are used to evaluate them, makes it difficult to definitively substantiate the idea that entrepreneurs, by nature, are high-risk seekers. As some studies suggest, entrepreneurs do not necessarily take on more risk than non-entrepreneurs; rather, they may simply have a relatively high confidence (often to the point of overconfidence) level in their own capabilities… such that they don’t perceive what they’re doing to be risky in the first place. For financial advisors, this means that for some of their clients who are business owners (and for some advisors themselves!), the challenge may not be so much about dealing with high risk-takers, but instead about how to work with clients who can be overconfident (and fail to recognize the risks they actually are taking).

In turn, there are three aspects of overconfidence: overestimation (when someone believes they are better at something they actually are), overplacement (when someone believes they are better than a targeted person or group, even though they are not), and overprecision (when someone believes their expertise or ability is based on facts or past experiences, but the facts and/or experiences have been incorrectly recalled). And while exaggeration of any of these facets of overconfidence can lead to potentially disastrous results, attenuating the overexpression of these behaviors can actually be beneficial for individuals facing difficult challenges.

Financial advisors can help overconfident clients by ensuring their clients understand their financial situation clearly and accurately.  This reduces the risk of clients taking action on wrong information, and can help ensure that the client has a clear understanding of ‘normal’ parameters pertinent to their financial situation, whether that relates to a business venture or simply a personal checking account balance.

Another tool that the advisor can use to help clients recalibrate potentially skewed (i.e., overconfident) beliefs they may have about their own abilities or resources is an adaptation of Subjective Probability Interval Estimates (SPIES), a methodology developed by psychology researchers to study overconfidence. By helping the client identify all possible outcomes of a decision being considered, advisors can help the client gain a clear, objective perspective of accurate and realistic information.

Ultimately, the key point is that financial advisors working with entrepreneurial clients shouldn’t necessarily assume that they are risk-takers, and instead recognize that their confidence (or overconfidence) may instead be blinding them to their risks. Yet at the same time, advisors with overconfident clients don’t necessarily need to encourage these clients to abandon their overconfidence (which really can help them to overcome the real-world daunting challenges of entrepreneurship). Instead, presenting clients with enough knowledge to help them understand how the actual risks they may be facing can impact their situation (and how those risks may pose very real threats to them, which can arise through the actions of other, potentially less skilled/knowledgeable individuals over whom the client has no control – no matter how lucky they may feel) can be the cornerstone for creating a sound financial plan, that still takes prudent risks… but with all the appropriate safeguards in place!

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One of the most frustrating parts of providing financial planning advice is that not all clients follow through on the advice that is clearly ‘good’ for them. Of course, the reality is that as human beings, we often don’t take the advice proffered by others. But when a prospective client comes to the financial planner for advice, there is a reasonable expectation that they’re ready to act on the advice they receive! Except, as it turns out, research suggests that often the fact that we reach out to an advice-provider is not necessarily a reflection of our readiness to take the advice; instead, it is just one of many steps in a client’s progress through the stages of change from inaction and complacency to actually taking action to change their situation for the better! And by understanding the various stages of change, we can better understand the reasons why clients get stuck in the first place and engage the client in specific processes that help them move forward and make progress in implementing their financial plans.

Interestingly, of the six stages of change identified by psychologist James Proschaka and his team of researchers, only half of the stages actually involve any action steps towards implementing the change. The first three stages of change, where many clients tend to get stuck in following through on their financial plan, don’t involve any action at all.  Instead, these ‘non-action’ stages involve self-reflection and emotional preparation to proceed with the change being considered, from Pre-Contemplation (where clients don’t even realize there’s a problem to contemplate fixing) to Contemplation (when they understand that a change is indeed necessary, and acknowledge that there is something they can do about it… but aren’t ready to do anything about it yet), to the third and last non-action stage, Preparation (where we begin to think about what needs to happen and will make plans to actually implement a change). Only at that point can the individual move on to the ‘action’ stages, which include taking action and maintaining the new behavior required to sustain the change.

Advisors can ask clients who seem to be having trouble taking action on their plans a set of four specific questions to understand where in the process they may be stuck: 1) whether the client can identify what they want to change; 2) if they know what they need to do to change; 3) if they believe they have the capacity to make the change, and; 4) if they are committed to begin taking action.  Alternatively, advisors can use ‘scaling’ questions to determine the degree of commitment and/or interest to the change being considered and use their clients' responses as a way to adjust courses of action accordingly.

Furthermore, the Transtheoretical Model (TTM) of Change is a framework that identifies ten processes that can be used as tools to help clients move through the various stages of change. These processes are either experiential (dealing with experiences through thought and emotion and more often associated with addressing non-action stages) and include steps that help clients through the Pre-Contemplation stage (Consciousness-Raising, Environmental Reevaluation, and Dramatic Relief) or a mix of other stages (Self-Reevaluation, Social Liberation), or behavioral (involving the client actively taking steps to set the change in motion) and include Self-Liberation, Helping Relationships, Reinforcement Management, Counter Conditioning, and Stimulus Control.

One of the most important considerations when helping clients implement change is the concept of self-efficacy, which is an individual’s sense of their ability to take action in response to a situation. Ideally, advisors will use TTM tools to help clients increase their self-efficacy, whether it be through providing the client with ample opportunity to reflect on the meaning of the change that needs to be made, or simply supporting their efforts (and not necessarily pushing them to action, which can be counterproductive with a client not yet ready to take action).

Ultimately, the key point is that there are processes that advisors can use to help their clients move through the various stages of change, which can make it easier for them to work with those clients who may be stuck or resistant to take action. It is also important to understand that change involves behavioral ‘non-action’ stages and that clients may still be making significant progress even though nothing seems to be happening. By recognizing where clients are in the change process, advisors can decide how to provide the right kind of support to their clients to help them tackle their specific blocking points, and move along in getting on track with their financial plans!

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In recent years, technological advances in remote communication have allowed all sorts of professionals to expand beyond having clients just in the towns and cities where they live and meeting those clients in just one location. Financial advisors have been taking advantage of that trend as well, as the internet and video and other collaborative meeting tools have increasingly made it feasible to serve clients across the country (or even around the world), start practices on a shoestring budget, or simply to keep clients when they relocate themselves (resulting in a more and more geographically diverse clientele over time). Still, financial advisors who adopted a fully virtual “location-independent” practice were in the minority... until this past March, when suddenly, those who were fortunate enough to have jobs that lent themselves to remote work, found themselves having to navigate the world of virtual work literally overnight, including financial advisors.

The transition wasn’t always smooth, and many advisors still lament what’s been lost by not being able to meet with clients in person. But the good news is that it turns out that there are some rather favorable aspects to meeting clients virtually, and engaging with professionals in a virtual environment is something that psychologists have been studying in their domain for many years now. In fact, a recent literature review in the Journal of Financial Planning suggests that virtual financial planning may be just as good (or perhaps even better) as advisors address their clients’ emotional concerns!

Specifically, the research shows that virtual client meetings create a lower barrier to entry for otherwise-nervous clients who want to meet, and provide more flexibility in how and when meetings happen, as they offer increased logistical convenience and reduce any stress around actually going to the meeting itself. And as it turns out, having the option to meet from a more comfortable and familiar (i.e., home) location may even have a therapeutic benefit in and of itself! Meanwhile, that same flexibility increases the advisor’s availability, which can be particularly valuable in times of need.

Beyond that, virtual financial planning can potentially help clients adhere to their plans as well. In a more ‘normal’ environment, where in-person meetings typically take an hour or so and happen only once or twice a year, it is very easy for tasks to fall through the proverbial cracks. Instead, shorter and more frequent virtual meetings can help both clients and advisors focus on a few of the most important tasks… and the supporting follow-through necessary to ensure they actually get done. This can be especially helpful for clients who are stressed about their finances, as might be more inclined to keep their virtual meeting and actually talk to their planner, instead of canceling or putting their meeting off.

That’s not to say that virtual meetings aren’t without their challenges, though, but the good news is that there are some simple strategies advisors can use to deal with those challenges effectively. At this point, it’s no mystery that “Zoom Fatigue” is a very real thing, as our brains simply aren’t wired to deal effectively in a (prolonged) virtual environment. Not only do they hinder our ability to read body language and receive subtle (but extremely important) nonverbal cues, but they also reduce the amount of feedback that participants provide, as it’s natural for our brains to zone out in such situations. To combat “Zoom Fatigue” and stay focused on the task at hand, advisors can try having only the video conferencing system open on their computer, shutting off notifications from their phones and other communication applications, avoid using a virtual background, keep microphone and cameras ‘on’, and use all the reduced distractions to focus themselves on being more active listeners.

Ultimately, the key point is that, although financial advisors have had to manage a plethora of changes in a post-pandemic world, the good news is that there are several benefits that clients (and advisors) can enjoy as a result, including offering lower barriers to entry and greater flexibility and convenience, as well as an increased likelihood that clients will adhere to their advisor’s recommendations. And while there are various challenges inherent in remote settings, there are a few easy-to-implement strategies that advisors can employ to not only harness the utility of virtual meetings, but in many cases, provide even better outcomes for clients!

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The very foundation of doing financial planning starts with gathering client information in order to produce financial plans that analyze a client’s situation and provide recommendations to help clients realize their goals. But the process of data gathering to do financial planning involves a lot more than simply gathering financial data. As while the first responsibility of the financial planning process under the CFP Board’s Standards of Conduct is to “understand the client’s personal and financial circumstances,” it is crucial for advisors to establish a solid rapport based on trust to facilitate open lines of communication in the first place. After all, identifying the issues that involve a client’s personal circumstances, along with the details of their financial goals and dreams, requires the client to have a high level of trust in their advisor to disclose their most intimate financial details and be able to comfortably talk about and explore their hopes, dreams, goals, and wishes. As a result, knowing how to ask the “right” questions that elicit trust and create rapport can be vital for financial advisors to gather the information they need – both financial and personal – to ultimately formulate the best financial planning recommendations for their clients!

In practice, there are several types of questions that advisors can strategically use to obtain information and at the same time strengthen client relationships. One type of question that encourages thoughtful reflection is the swing question, which poses situations with hypothetical phrases beginning with words such as “will”, “can”, “would”, or “could”. These are good question types to gently probe points of resistance (e.g., instead of asking “Why haven’t you called your estate planning attorney yet?”, ask “Can you tell me how it’s going with your estate planning attorney?”) or explore ideas that may be new to the client (e.g., “Could you explain your education funding ideas for your grandchildren?”). Swing questions are best used with clients with whom the advisor already has an established relationship, and can be good ways to deepen ties with the client.

Implied questions are another type of question and are generally statements structured as questions, beginning with phrases such as “I wonder…” or “You must be…”.  Implied questions are a useful way to reiterate an important idea that the client has expressed, and show the advisor’s genuine interest in the topic.  They also offer a good opportunity for the client to provide further details around personal situations that can impact how a financial plan should be tailored (e.g., “I wonder how you see your new employment opportunities affecting your retirement goals?”). Like swing questions, implied questions are most effective when the relationship has already been established, and can serve to enhance the rapport in those relationships.

Projective questions are open-ended questions that can be used to help clients visualize scenarios that the advisor may want the client to consider. They generally start with phrases like “What if…” or “What would…” and can help clients envision and understand new possibilities that may make sense for their financial plans. Scaling questions are another type of question and can be used to assess relative levels of a client’s interests and concerns. These are typically structured as “On a scale of x to y, where are you on that scale?” For instance, an advisor can ask their client something like, “I know you’ve expressed concerns about the recent market activity; on a scale of 1 to 10 where 1 is the calmest and 10 is the most anxious, where are you on that scale?”  Both projective and scaling questions are good ways to solicit information that the advisor may be specifically interested in and can be used with any client, regardless of whether the relationship is well-established or still relatively new.

For any questions that the advisor chooses to use, it is important to be mindful of when to ask them, and when to give the client space to reflect on their answer and elaborate with details. Asking questions too rapidly without room for reflection will generally be very stressful and overwhelming for the client… feeling less like an advisor-client relationship and more like an interrogation! However, by pacing a series of questions to allow the client to digest what is being asked, and to contemplate their answer, the advisor can gather valuable information not just for financial planning purposes, but also for better understanding the client on a personal level and deepening the relationship.

Ultimately, the key point is that by choosing the right questions to ask, and pacing the questions to allow for reflection and thoughtful exploration, advisors can learn a lot about their clients to help them develop effective financial planning strategies and, in the process, enjoy deepening their relationships as well!

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