Advice That Sticks. Moira Somers

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СКАЧАТЬ Most People Find Unpleasant, financial experts have something of considerable value to offer to a great many people. (Sigh. If only it were possible to offload root canals and hair removal, too.)

      To make someone else happy

      Some clients show up in your office solely for the purpose of making someone else happy … or to get someone else off their back. (In my clinical practice, I refer to this as the Parole Officer Model of service delivery.) If you have been in the business for a while, you, too, undoubtedly have had people in your office who are there at someone else’s behest. They may be there to set up a prenuptial agreement, or because they have come into a trust fund, or because they are facing bankruptcy proceedings. They may be the spouses of longtime clients, those silent partners whose names are on all your paperwork but who never darken your door unless forced to do so. They may be overnight millionaires who just made it big in business or won a lottery, and who have been counselled to ‘talk to someone’ about how to deal with their changed circumstances.

      Whatever the precipitating factor, such clients are often sent to you during times of tumult and change in their personal lives. Although this may not seem like an ideal situation, your help can result in remarkable peace of mind for the individual and his or her family or wider social network. It can take a little extra time and sensitivity from you to get past their initial resentment, embarrassment or discomfort over having been sent to you, but it is possible to form a vibrant working relationship with such folks.

      Odds are high that they truly do need some help. It’s equally likely that the people who sent them to you need some help, too. Your task is to figure out whether it’s your help that is needed first and foremost (as opposed to the help of a therapist, attorney, or bond bailsman), and, if so, how to increase the likelihood that they will make use of it. We will be examining ways to do so in Chapters 6 and 7.

      To increase confidence

      Another common reason for consulting with experts is to increase confidence about an intended plan of action. Individuals want to make sure they have not overlooked any important considerations that could end up disadvantaging them. You bring extra value to the advising relationship when you employ different decision-making strategies or consult different sources of information than the clients would use on their own.

      A study undertaken by the Financial Planning Standards Council of Canada has confirmed the value of the profession in this regard.⁷ The study followed Canadians whose net worth spanned the gamut from modest to wealthy.⁸ The results revealed significant increases in the financial and emotional well-being of clients who had consulted comprehensively with financial planners. Quite strikingly, there were marked increases in confidence apparent in every domain surveyed. Not only did expert financial advice increase people’s confidence that they were on track to meet important future goals, but it also increased their confidence they could deal with setbacks in life without having to forego some of the good things that money can buy in the here-and-now. Similar increases in confidence were highlighted by the Fidelity Retirement 20/20 survey report in 2017.⁹

      Many financial advisors can cite examples of grievous over-confidence in people from their own client list.^* While such clients stick out in our memory, they are not typical. It is much more common for people to seek advice because they are unsure of something, and are concerned that what they don’t know could hurt them. They want to leave your office with the certainty they have considered all of the pertinent factors and have settled on a satisfactory plan of action. If you can provide them with that confidence, they are more likely to persist with what they need to do.

      To help make better tradeoffs

      Consider the following questions:

      Is it best to choose the lower monthly pension amount and ensure a greater survivor benefit, or opt for higher monthly payments from the outset?

      Am I better off by moving to a bigger, less expensive house in the suburbs where I’d have to commute longer distances, or by staying in my tiny city house where everything is close by?

      Should I leave my fortune to my ingrate grandkids, or give it all to the Squirrel Rescue Sanctuary?

      These are questions that can’t be answered with factual information alone. Crunching the numbers can give some guidance, but that’s only the beginning. What really improves the quality of decision-making is personalized attention from someone who knows your family history, your lifestyle preferences, and your values – or, at least, someone who is willing to take the time to have those kinds of conversations with you.

      Dan Ariely is a psychology professor and the author of several bestselling books on behavioural economics. He has devoted his career to the study of how and why people make the decisions they do. One of his most robust core findings is that people often do not know how to choose rationally, let alone wisely. Fortunately, he assures us, people can be helped to make better tradeoffs just by being asked to consider some of the things they normally overlook or are prone to overvalue. In light of this need, he asserts that financial advisors should radically rethink what they have to offer their clients. Instead of spending an hour fine-tuning a client’s investment portfolio in advance of an annual meeting, argues Ariely, an advisor would offer greater benefit talking with the client about spending and savings patterns and the tradeoffs involved in day-to-day decisions.

      Ariely has found that advisors presented with this proposal usually argue strenuously against it.¹⁰ ‘That’s not my job!’ they protest. ‘Why not?’ Ariely pushes back. Who else is equipped to help someone with decisions involving both actuarial and lifestyle considerations? Doing so blends both the technical and the personal sides of advising at the highest levels.

      To receive encouragement

      My congregation was recently asked to fill out a survey regarding why people attend weekly church services. One of the main questions was, ‘What do you most want to experience as a result of coming to church?’

      Top answer: Encouragement.

       Heck, yeah!

      I see the same yearning in my financial therapy practice on a daily basis. People who come to see me usually have some kind of painful money history or current dilemma. They may have made bad investment decisions or overspent. They may have been exploited or experienced a huge hit to their lifestyle due to a major personal setback such as job loss or divorce. Because of the secrecy and shame that attend financial matters for many people, they may find themselves to be short on support and encouragement when they need those things the most.

      Warmth and good cheer are rarely misplaced, but they are especially vital to clients who are trying to change longstanding habits. When the behaviour change is daunting, long-lasting, preventative, or unusual for their social circle, your encouragement can go a long way to helping people persist. Too often, however, financial change agents cut clients loose once they’ve demonstrated just two or three months of positive behaviour change. That is just around the time that clients’ enthusiasm starts to flag, or they get hit with an unexpected life event, or their deadbeat cousin shows up and starts pressuring them to do something contrary to the plan you’ve co-created.

      To have someone to blame

      One of the blessings of disposable income in my life is that it allows me to hire a housecleaner. Having such a person come into our home offers some of the benefits cited in the previous pages – ‘time savings’ and ‘offloading of unpleasant tasks’ chief among them. But one unexpected benefit of a housecleaner has been that there’s always someone for me to blame when something goes missing! (Just to be clear: I blame her only in my head, not out loud. Because it never actually is СКАЧАТЬ