Helping clients make decisions and take positive action to help themselves is a key role of financial advisers.
From a signature on engagement letters to making major life choices, for example retiring, the financial adviser will be coaching, supporting, guiding and advising the client along the way.
In our coaching and financial wellbeing training for financial advisers, advisers often share how they get frustrated with some of their clients when the clients don’t sign documents, avoid making decisions or don’t change self-defeating behaviours, despite the advisers’ best efforts to convince them that it is the right thing to do.
The harsh reality is that in today’s modern world we all make thousands of decisions and choices every day - and we get decision fatigue. When the decisions are stressful, has consequences and have a level of uncertainty to them, we are more likely to delay the decision - even if the effect is clearly detrimental and self-defeating.
On top of that, it is estimated that 20% of the population are habitual procrastinators. The procrastinators are often perfectionists and fear failure. They are highly concerned about what others think about them and they struggle to make important decisions and choices - not choosing absolves them of responsibility for the outcome.
The challenge for advisers is that the type of financial decisions your clients have to make are important, there is a lot of uncertainty involved, the clients often don’t really understand the technical language and the implications, and they can easily feel overwhelmed by the amount of information and paperwork involved. On top of this you have people’s self-limiting beliefs (e.g. confidence in themselves) and biases (e.g. loss aversion), that may pull the client towards inaction.
All of these factors - and more - will contribute to a very taxing decision-making environment for your clients. On the positive side, many of these are also the reasons that people need financial planning and support from experts like yourselves.
So how do you help them? Here are three tips:
1. Make the process safe and simple
First and most importantly: Throughout the process, from the first correspondence and meetings you need to build the client’s trust in you. Coaching skills will go a long way towards building rapport and trust, as the client feels listened to, understood and safe in your hands. Don’t focus on making the client trust you through showing how clever you are, your certificates etc – the effect is limited and can be counter-productive.
Secondly, make the process clear and simple for the client. Don’t provide a detailed 20+ step-by-step process to make sure nothing is forgotten (and to justify your fees!) – this can easily be overwhelming. Research shows that setting a feasible, concrete, short-term and step-by-step plan for the task of decision making greatly reduces procrastination and promotes success. So, describe a simple overarching process and then the next one or two steps.
Give the client a sense of control by giving them permission to ask questions and to stop you if they feel uncomfortable. Explain where and how they can pull out, so they don’t feel trapped into a ‘sales funnel’. Make sure they feel supported to achieve what they want, rather than coerced.
2. Understand how the client makes decisions
One of the key things we explain in our training is that the purpose of listening is to really truly understand the client (and make the client feel understood). What makes this specific client tick? How do they think? How do they process information? What is important to them? What are their fears? How do they make decisions? And so on.
It is this deep level of understanding that enables you to truly help the client both in terms of creating a financial plan that meets their needs, but also importantly in terms of helping them through the process of making decision and choices.
And this is not rocket science. To understand their decision-making processes, simply ask ‘How do you normally make decisions of this type?’ ‘How do you prefer to be presented with choices?’ etc. When you understand these, you can adjust how you guide the client through the decision-making processes.
For example, if you know that they usually speak to other people they trust before making decisions, don’t try to discourage this (which I have seen some advisers do out of fear of losing control), but rather ask how you can help and what information would be useful for the client to have for these conversations.
3. Reduce the number of choices and decisions
Consider also how your paperwork comes across. Is it simple, or are there a lot of choices to be made? I recently saw a 21-page engagement letter with descriptions of 6 service levels and 30 choices to be made by the client, each with cost implications. No wonder that a significant proportion of clients never went past this stage.
Recognising that people are different and giving them a bespoke service that suits everyone’s individual preferences is great, but there is a high risk of decision overwhelm and fatigue, so consider how to narrow down the choices based on what you hear in your conversation with them, and then give them a few simple choices with clear differences in outcome, price etc. (bonus tip: 3 seems to work well for many, but again listen well to understand their preferences).
The above three tips will clearly not help every instance, there are many other potential barriers to good decision making that you may have to deal with as an adviser. But I believe that implementing the three tips above will help you reduce the likelihood of client in-decision. For the remaining you will need to dive deeper through good coaching questions and listening to surface the underlying reasons and then take appropriate action to help your clients move forward.
