Despite the emotional roller coaster that financial advisors have experienced over the past 12 months—and the advisors I have spoken with have expressed feelings ranging from devastation to optimism and hopefulness—most of them are ready to initiate financial action with clients and regain control of their practice.
Unfortunately, many of their clients are not experiencing the same level of financial confidence and resiliency. The ultimate challenge facing financial advisors is how to guide clients to manage their anxieties, move forward and take the necessary steps to ensure their financial futures. Undoubtedly, by managing your clients’ financial anxieties, along with their assets, you will provide an invaluable service to them.
Do you know the milestones of your clients’ lives, their priorities and financial fears? Could you have predicted your clients’ reactions to the economic situation this past year? Were you surprised by those individuals who fell apart or those who remained calm and stoic? In order to effectively guide clients through a crisis of this magnitude and help them recreate a solid financial future, you must first understand how they react emotionally in everyday life.
Whether an individual has experienced a normal life event, such as marriage, divorce, or death of a spouse, or is overwhelmed by the aftershock of the financial trauma this past year, everyone has a pattern of behavior that determines our ability to cope. Understanding the complex interaction between life events and coping skills can provide you with insights into the emotions shaping your clients’ immediate financial needs and concerns, as well as affecting their long-term financial goals.
When faced with obstacles to their goals, some individuals are able to recreate their future financial vision, while others simply shut down, and become pessimistic and have difficulty making decisions. It’s during these life-defining events that clients most need the help of a financial professional in taking control of their financial future.
The key to predicting an individual’s ability to cope and function during extremely stressful times is the level of resiliency they possess. Helping your client to be more financially resilient is critical if you are going to guide them to make effective decisions and take proactive steps towards their financial goals. Resiliency or hardiness is the much-needed ability to remain in control, focused and committed when faced with challenging circumstances.
Some of these skills can be fostered in a relationship with your client through the following steps:
- Help clients tolerate their anxieties by identifying their irrational thinking and diffusing fears with alternative rational statements;
- Encourage action in spite of negative feelings. Remind them that behavior is easier to change than feelings. If they wait until they feel better, they may wait a long time and miss important windows of opportunity;
- Reset goals and establish priorities;
- Project into the future and try to anticipate the impact of the present choices;
- Discriminate and help your client make choices consistent with goals and values;
- Recognize that life events create an opportunity for both positive change and anxiety. Help your client adapt their thinking and commit to increasing their “heartiness” in order to minimize the level of disruption in their ability to function effectively.
Helping Clients Get Unstuck
Now that you know what to do to help your clients move forward, the greater challenge for most advisors is how to do it. The first step in helping your clients to get unstuck is to ask specific questions about an individual’s life, values and priorities. However, many advisors find this type of conversation with their clients uncomfortable. Effective communication is the key to accomplishing this goal.
Psychological research and clinical experience has enabled us to identify two important aspects of communication: the content of your interactions and the process. In order to have successful outcomes in your communication with others, you must address both aspects equally.
There are key points to remember. The content qualities are:
- Respect between you and your client—it is important not to patronize your client;
- Empathy—acknowledging your client’s concerns and needs, even if you don’t relate or agree with them;
- Concreteness—giving specific suggestions and offering a plan of action; i.e., how long to observe and wait, at what point to initiate an action; and
- Assertiveness—expressing yourself confidently and firmly when necessary to guide an overwhelmed and emotional client.
Redefining Your Relationship with Your Clients
Most clients need you to not only be the financial expert, but to help reduce their financial anxiety by offering them support, information, reassurance and guidance. However, the danger in any relationship where someone is dependent upon you is not having appropriate boundaries.
You want to help navigate your client through difficult times, but not assume responsibility for their decisions, or events that are out of your control. It is your responsibility to educate your client and help them take appropriate control of their own financial future.
By clearly defining your mutual client/advisor behavioral expectations, you will not only help them be more resilient, but also solidify your relationship and role as their trusted advisor during emotionally and financially difficult times.