Filling the role of therapist while financial planning

October 17, 2016 by Drew Butterfield

About the author

Drew Butterfield

Business analyst

As a product expert, Drew has extensive experience working directly with both retail and enterprise partners. He enjoys taking feedback from users to continue Advicent's high standard of financial planning software. Drew graduated with his MBA in 2014 and is currently pursuing his CFP certification.

Financial advisors may wear a lot of different hats while working with clients. One of the more unique roles that an advisor could potentially fill is the role of financial therapist. The Wall Street Journal published a very intriguing article on the phenomenon of financial therapy. Most advisors may only wear their financial therapist “hat” a small portion of the time, but even then they will not go as in depth as the specialists do. However, it is important to have some basic therapeutic skills to assist in client interactions. When you think about it, clients are pouring out their hopes and dreams to their financial advisors – paying for their child’s college tuition to perhaps provide better opportunities than they had themselves, buying their dream home, planning for a secure and stable retirement – and depending on these advisors to help them make these dreams a reality.

It really is a set up for a therapeutic relationship. Here are a few tips and tricks for establishing a successful therapeutic relationship with clients.

Try to avoid “why” questions

Starting off, it is probably good to go over a few things that will help get your clients in a comfortable state and begin building the client-advisor relationship. Questions that start with “why” sound accusatory in nature. They will likely force the clients into providing an answer that is more a defensive justification than an honest, open-ended discussion, regardless of the intent behind the “why” question. If the clients feel like they are forced to justify their financial decisions and goals, they might be less willing to open up to their advisor. This is especially the case with more sensitive clients. This creates an imperfect information scenario, where one party, the client, knows the whole story, while the other, the advisor, does not. Such a scenario is not only detrimental to the client-advisor relationship, but also inhibits the advisor’s ability to develop and implement effective recommendations. Providing recommendations, even if they include changing financial behavior, can and should be accomplished without the client feeling like they need to put their guard up. Such an approach will go a long way in building trust and developing a strong relationship.

Engage in active listening

This seems like a no-brainer, but it really is essential in creating a solid client-advisor relationship. Clients are more inclined to share information with someone they feel is truly listening to them. In turn, the advisor benefits by having all the information available to build the most effective plan possible. People are also more likely to be relaxed when they feel like someone is not only listening, but also cares about what is being said. Building client trust and fostering an environment free of anxiety can make the difficult financial conversations much easier to have.

Physical cues, such as nodding and smiling, will go a long way in conveying that you are listening attentively to your clients. Leaning towards the person slightly, facing them, and making regular eye contact are also ways of physically enhancing the listening experience for the person speaking. In terms of non-physical active listening strategies, intermittently interjecting with a “yes” or “okay” as the client is speaking shows that you are still with them, but that you want them to continue forward. Restating what has just been said is also a common yet effective strategy that shows you have been paying attention. Asking for clarification on something specific after a restatement response will also show that you were not only listening, but that you are interested in hearing or knowing more. All of these strategies make the speaker feel important and can relive any anxiety they might have about not being listened to or cared for.

Get a feel for your clients' relationship with money

Using some of the techniques discussed in the previous paragraphs, as well as other effective techniques, should relieve anxieties your clients may have. That should open the door to have an in-depth discussion about the clients’ relationship with money, much like a conversation a financial therapist might have. It might seem like a waste of time if it is not a goal- or plan-centric conversation. It might even be a topic that could be better handled better by a specialist in financial therapy, but it really can tie into the plan and be a useful conversation for an advisor to have. Getting a sense of the clients’ relationship with money can help understand where the clients are coming from and why they are engaging in the behavior they are without having to ask those aforementioned, potentially painful “why” questions.

Gaining an understanding of the clients’ relationship with money also helps understand their values – something that can be very useful for an advisor to know when building a personalized financial plan. Knowing such details can help an advisor craft goals and strategies as well as avoid forcing his or her own values onto the clients. A good example might be an instance where the clients have children near college age and the topic of education planning comes up. Understanding the clients’ relationship with money and their values may reveal that they feel as though having their children pay all or part of their own college expenses will instill a strong work ethic in their children, so they either do not want to have an educational planning discussion or only want to set a small goal. If these values were not understood, the advisor may have incidentally led the clients into thinking they should pay for their children's college education, which not only derails the discussion on goals they consider more important, but may impact other goals as well. If paying for a college goal they never really intended to pay for results in decreasing the clients’ ability to achieve some of their retirement goals, the advisor may have believed they crafted a successful plan that allowed the clients to achieve most of their goals, but really the clients have lost out on something they wanted.

While an advisor does not need to be a full-blown therapist, having certain skills that establish a therapeutic client-advisor relationship can be very beneficial. To learn more about the financial planning technology that can support a successful, open client-advisor relationship, click here or call (855) 885-7526 to speak with an Advicent representative.