Financial advisors, stop ‘shoulding’ all over the place

A key character trait driving successful careers in wealth management may not sound as if it relates to money, investing or financial planning — but experts say it’s essential to them.

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“When anybody asks me, ‘What is the number one trait for a financial advisor at any phase of their career to exhibit?’ — it is simply intellectual curiosity,” said planner, personal finance author and registered investment advisory firm executive Tim Maurer. “If we are curious about our clients, about their life story, about anybody we have the opportunity to impact, it will lead us to good opportunities to have meaningful discussions, and it’s very difficult, I might add, not to be judgmental, maybe even especially in this business.” 

Maurer’s guidance to advisors drew from a quote — “Be curious, not judgmental” — famously misattributed to the poet Walt Whitman. That lesson was one of many takeaways for planners on how to help pro bono clients and other customers overcome the false belief that they cannot become wealthy, discussed during a Foundation for Financial Planning webinar this week led by Maurer, the senior vice president of advisor recruiting and integration at Atlanta-based RIA firm SignatureFP.

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Empathy over shame

That need to help people alter their relationship with money aligns with research suggesting that one of the most valuable quantifiable services advisors provide is their behavioral coaching. But to do so requires advisors to develop qualitative skills that remove people’s mental and emotional barriers to their wealth goals. And it often demands that advisors shed some unhealthy traditional industry habits, such as their “tendency to ‘should’ all over the place,” Maurer said. Preachy, pedantic scoldings about saving more, falling behind on retirement nest eggs and monthly budgeting failures turn people away from advice.

“Shame is one of the silent killers of behavior change, and this is something that is going to be even more common in, say, pro bono clients, people who are still getting that foundation built, who may not possess the confidence that wealth building is something that is possible for them. And shame is something that, unfortunately, is all too common in the financial advisory space,” Maurer said. Instead, advisors may take a page from the work of science and business author Daniel Pink, who found that “autonomy, giving people the ability to make decisions themselves,” serves as a much stronger motivator than shame or guilt, Maurer added. 

And that, in turn, forms the “the whole basis of an empathic approach to financial planning, ensuring that people feel like they can master the guidance that we offer them,” he said. “We have an opportunity to change the language we use to be more inspirational for all the clients we serve, but especially those who are struggling to build confidence as they build wealth. The key insight here is that ‘you can’ is greater than ‘you should.'”

Such realizations reflect the fact that, “If people are not having the financial success that they want, it can’t just be a mathematical problem,” according to financial behaviorist Jacquette Timmons, who coaches advisors, wealth management firms and investors on the emotional side of money. In a separate interview after the presentation, she said advisors run the risk of creating “a disconnect” from their clients if they reject how emotions enter into the money and wealth equation for the customers and themselves. In doing so, they may ignore trauma dating to childhood memories that are blocking them from taking action today, or omit assisting clients with how to define the meaning of wealth outside of stock and bond portfolios to assets like real estate or businesses and other resources like time and mental. physical or spiritual health.   

“I don’t think we spend really enough time expanding what wealth can look like,” Timmons said. “Sometimes, because the conversation is so narrow, we forget about those other dimensions and the impact that those other dimensions have on your ability to get the wealth that you want.”

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Navigating the divides

Planners may be falling short in that regard more frequently than they would like to admit. In the presentation, Maurer brought up research released a few years ago by the Financial Planning Association and Allianz Life Insurance Company of North America that showed how some planners may be overestimating the effects of their services to clients. 

In 2021, independent researchers from the MQ Research Consortium and the Kansas State University Personal Financial Planning Program asked 352 planners and 429 of their clients about the effectiveness of their relationship. Across eight different quantitative and qualitative subject areas, the group of planners rated their ability to communicate with the clients and understand their goals much higher than did the customers. Maurer specifically mentioned the finding that 87% of the planners agreed with the statement that the “planner is open to discussing what [the] client values most in life,” compared to just 50% of the clients.   

Even if the divide isn’t that wide among all advisors and clients, switching out common industry rhetoric could prove beneficial to the relationship. With nods to figures like “life planning” innovator George Kinder, “Wired for Wealth” authors Rick Kahler, Brad Klontz and Ted Klontz and “Advice that Sticks” writer Moira Somers, Maurer applied some behavioral finance tools to the narratives that impede people from building wealth. He gave examples of typical views on finance relating to people’s notions about wealth that are known as money scripts, along with ideas that flip them on their heads:

Instead of “I’m bad with money,” think, “I’m learning a system.”Instead of “We were never the kind of people who saved,” think, “We’re becoming the type of people who save.”Instead of “I’ll never get out of debt,” think, “I’m making a plan to change this.”

That reframing creates more space for clients to find a path forward.

“Oftentimes, what we need to do is aid people in rewriting their identity narratives and their money scripts,” Maurer said. “The insight that I humbly bring to you in this case is that what we believe about money will impact what we do with and for it.”

He also suggested that advisors adopt language that avoids the potential for human embarrassment that could block clients from taking positive actions. For instance:

Instead of “You should be saving more,” say, “You can start building a cushion this month — even $25 matters.”Instead of “You’re behind on retirement,” say, “You can recreate your salary in the future — let’s map what that looks like.”Instead of “Most people your age …,” say, “For your situation, here’s what’s possible.”

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Ask and you will receive

On the other hand, asking open-ended questions and listening actively to clients’ answers may serve them best of all in some cases, according to Maurer. He likes AI-powered meeting tools that keep track of who is speaking the most in meetings. Any advisor who thinks they are “giving the client 60%, 70%, 80% of the time” to talk is simply wrong, Maurer said. He recommended methods like repeating what the client said back to them in order to check whether an advisor’s perception is wrong or missing any of the main points, and trying to avoid “hijacking the conversation” by “projecting our own viewpoint” about every topic.  

“We are not the hero of our client’s situation, and this is something we could fall prey to, maybe even especially in dealing with pro bono clients or clients who have yet to gain the confidence,” Maurer said. “We might allow them to lean too much on us. Our objective is to make them the hero of the story. We get the privilege to be the guide. They themselves are the hero, and it’s them that we want to build confidence in, because that will aid them more down the road than becoming dependent on our insight or our judgment.”