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In financial planning, it's not just about having expert knowledge and wisdom to dispense to clients; after all, if clients don't ultimately implement the recommendations and change their behaviors, then their situations will not improve. In fact, many financial planners experience frustration when client's won't act, and view the failure of clients to implement recommendations as a sign that the people must be "bad" clients. The implication is that it may be more productive for planners to seek out "good" clients instead - those who act promptly and see the value in the planner and his/her advice.

Yet research from Dr. James Prochaska and his colleagues in the field of psychology suggests that in truth, the process of changing behavior - whether with respect to eating healthier and exercising more, ending a smoking habit, or making better financial decisions - is far more nuanced. Not only does it often take more than just one dose of good advice to bring about significant and lasting behavior change, but just because someone has a meeting with a professional does not necessarily mean that person is really even ready for change in the first place. Accordingly, an ideal process for working with clients may entail first understanding what stage of change the client is in, and then adapting the advice process to help the client move forward, from wherever he/she is at the time.

The most important implication, though, is that it may no longer be appropriate to simply view clients who don't implement as "bad" clients. Instead, a greater responsibility may rest upon the professional practitioner to help clients, regardless of where they happen to be in the process of change, to move forward. In turn, this means that it may be time for financial planning training to be improved, to develop the understanding and skillsets necessary so that planners can not only inform clients of what needs to be done to improve their financial situation, but also help motivate them to actually do it!

The inspiration for today’s blog post is a recent conversation I had with another financial planner, who expressed frustration that his clients often don’t implement his recommendations. “Too many of my clients pay me for my advice, but never get around to implementing it,” he said. “Where can I find good clients who will actually follow through on their recommendations?”

What Is A “Good” Client Anyway?

One of the suppositions of my planning friend’s statement – commonly expressed in the financial planning world – is that clients who are unwilling to act on the recommendations they’re presented are “bad” clients. Of course, some clients don’t act upon the suggestions made by financial “advisors” who are really just trying to sell a product. But certainly clients should implement the advice of a fiduciary financial planner, especially if the clients paid a standalone hourly or planning fee for the recommendations and it’s clear they are not conflicted and in the client’s best interests. Right
The caveat of this viewpoint is that it implicitly assumes that the client was willing, ready, and able to implement the recommendation and change his/her behaviors, and that the client simply failed to follow through and do so - which also implies that a failure to act "must" be the failure/fault of the client. Yet the research on behavior change indicates that in reality, all people go through several stages in the process of changing their behavior, and not all clients necessarily show up in the financial planner’s office at the ready-for-action stage we typically assume!

Prochaska’s Stages Of Change

The leading researcher on understanding how people change their behavior is Dr. James Prochaska, who with his colleagues has published “Changing for Good”, arguably the definitive book on the subject with a comprehensive view of decades of studies by Prochaska and his colleagues.

What they found in their research is that while we classically think of behavior of something of immediate action – we decide we’re going to make a change, and act to do so – in reality the process is far more nuanced. In fact, his research found that change entails a six-stage process:

Pre-contemplation - When we’re not even cognizant we need to change (not ready yet)
Contemplation – When we begin to actively think about change (getting ready)
Preparation – When we take the steps to prepare for making a change (ready)
Action – The actual process of making the change (time to act!)
Maintenance – Where we take on proactive efforts to maintain the change (try to avoid relapse!)
Termination – The point at which we no longer need to actively maintain a change; the new behavior has become “permanent”

While the context of Prochaska’s stages of change was how people succeed in changing behaviors like smoking or poor exercise and dietary habits, the reality is that the stages of change map remarkably well onto many changes that financial planning clients consider. For instance, suggesting that a client needs to spend less now and save more for retirement, or redirect discretionary income from consumption to purchasing critical insurance, takes the client through a similar process. For instance, the client who needs to reduce spending may first be unaware of needing to change (pre-contemplation), then become aware of the importance of making a spending change (contemplation), then consider how to change spending (preparation), then implement the spending change (action), then sustain the spending change (maintenance), and only after a long period of time finally assimilate the new spending level as their new lifestyle (termination).

What’s most notable about Prochaska’s research, though, is that it also helps to explain why many people don’t engage in change, even when they’ve been informed/told they need to. In fact, pushing for change when clients are still in the precontemplation stage will tend to invoke denial of the need to change; instead, it's more helpful to raise their awareness of the problem and the need. Conversely, if clients are in the preparation stage, they need assistance to formulate the decisions and trade-offs necessary to move on to action – continuing to raise their awareness about the need to change is actually no longer useful. Prochaska and his colleagues found that in the context of programs designed to end obesity or smoking problems, simply understanding the person’s stage of change was able to almost perfectly predict who would follow through on the program.

Whose Fault Is It, Really?

Prochaska's stages of change from WikipediaThe key point of Prochaska’s research was that it illustrated how unproductive it is to blame the person for failing to implement an important change – even if it’s clearly in the person’s interests to do so (as is the case with demonstrably self-destructive behaviors like severe obesity, smoking, or alcoholism). Instead, the research found that failure of many change programs, from ending smoking to improving exercise and dietary habits, was primarily due to a misunderstanding of how change occurs: specifically, the erroneous belief that change is just about drawing up the necessary action steps and putting them forward for people to implement. In fact, Prochaska finds that one of the greatest reasons why change fails is because people are pushed to the action stage before they’ve progressed through the earlier stages and truly become ready to make a change.

In a similar vein, Prochaska’s research suggests that when clients don’t implement a financial planner’s client-centric recommendations, the problem may actually lie not with the client, but with the planner failing to properly guide the client through the stages of change! For instance, Prochaska has found that if clients are in the precontemplation stage, they may needed assistance for an extended period of time in simply helping to make them aware of the need for change – raising their consciousness about the issue and providing education – before moving on to the later stages. Just explaining the problem once is virtually never enough, just as the country's obesity problem is not solved the first time "eat less and exercise more" is suggested as a solution. Once an individual recognizes the need for change, then – and usually, only then – does an emotional appeal help to move the client forward further; in fact, by this stage the decision-making process shifts from a focus on the pros of making a change, to the cons of not changing. And only then is it time to move beyond education and stirring motivations, to actually begin considering specific trade-offs and preparing action steps for implementation.

Time For Better Training?

To be fair, the standard training for financial planning does not include the study of behavior change and Prochaska’s research, but perhaps it should, as it maps so cleanly onto the core of what good financial planning is all about. In fact, arguably behavior change is the very essence of real financial planning, as there is little value in using expert knowledge to craft recommendations if the planner is not also trained in how to guide the client through the changes necessary to implement them. Or viewed another way, financial planning isn't just about telling clients what to do; it's also about motivating them to do it!

And despite this reality, it's notable that "effectiveness in helping clients to change their behaviors" is rarely tracked or measured in any way in most financial planning firms. Yet given the importance of outcomes, perhaps “time from recommendation until implementation” actually should be something tracked in a financial planner’s Client Relationship Management (CRM) software. After all, it’s hard to improve the results if they’re not being measured in the first place. Once you can measure that only 68% of clients fully implement recommendations, and that it takes them 7.4 months on average to fully complete all the recommendations, is it possible to work on solutions to really improve client outcomes.

Beyond the need for training and better measurement, the bottom line is simply this: perhaps it’s time that we as financial planners recognize that when clients don’t implement, it may not be because it’s a “bad” client, but because we need to get the training to do a better job of guiding clients through the change process in the first place. And if you want to learn how, Prochaska’s “Changing For Good” is a good place to start.

  • Matt Becker

    Great article. I’ve run into trouble many times when trying to encourage people to change their financial habits, and the concept of stages of change is a great one. It has so many implications for how to structure the development of a client relationship. Thanks for the information.

  • Maria Marsala

    What I have learned is that if a client is not willing to make the changes they came to me to change, is to back up to “meet” them. So much so at times, that we don’t work on their business at all, but instead work on their personal foundation.

    There are times, often times, that a person’s wants and values are out of sync. And there are times that I’ve mentioned to a client that the situation they are in is due to something that a therapist would be more helpful about. During coaching training, the line between advising, coaching and therapy was stressed often.

    It’s important to know where the boundaries begin and end. Otherwise, you can do harm to clients (and I’ve had clients whose former coach, who had no training, has harmed them.

  • Jay DeVincentis

    Nice topic, training is huge but at the end of the day, the core values of the trainee will make the most impact. At it’s core I believe the more you can do for your client, the more you can guarantee that steps will be taken. It’s one thing to hire a financial planner and get some static recommendations for what to do today. But things could and will change tomorrow and to have to go back to your advisor for an update means clients will likely put off the initial advice. Point is, those who at their core want to help people, will. Those who get into this for the wrong reason, regardless of training, will not…

  • Todd Tresidder

    Ummm, sounds like financial coaching. In the end, advice only has value to the extent it results in meaningful action.

  • Maria Marsala

    Todd, just what I thought of when I read it and why I posted. In fact, Thomas Leonard, the “father” of coaching was a CFP whose clients needed “more”.

    Value is the key. Reframing what the client wants to accomplish, not in a task… but in it’s value is a motivator… because no one can motivate another person to change.

  • Rob Bartenstein

    Great piece Michael.It’s always more fun to work with clients who simply “follow our advice” but I’ve found that telling clients up front that, like a doctor, I’ll make my recommendations but I won’t drive to their house to make sure they follow them seems to resonate and shift the burden of action to them. At the same time, I won’t move forward on portfolio construction if, for example, the will isn’t in order. So creating hurdles is also helpful.

  • Tammy Prouty

    I love this and Yes, I definitely need to learn more in order to be a better financial planner. This area of financial planning gets me excited as I think specifically of a client I may be able to help curb their spending in order to buy the life insurance that they need.

  • Laurie Bonser

    Very much agree with the comments above and definitely advocate additional training for all financial planners – from those starting out to the latest updates for the more experienced. It also seems like a good idea that we all start including notice of this client service in our value propositions, so clients truly understand the entire package of what we can offer on an ongoing basis.

  • Partha Iyengar

    Michael..I am so glad that you wrote about ‘change’ and Dr Prochaska’s change model. I can’t agree more with Maria Marsala’s comments. This is exactly what we learn as part of Financial Life Planning and apply it in our practice. How can we facilitate our clients to focus on values and priorities in life that are in sync with their day to day lives and how to help them make the change gradually to follow through the six stage process. I firmly believe that if we want our clients to ‘ change’, we need to lead and live the change that we want to be. Clients can feel this from our conversations and it has the rub off effect. Of course, we will go through a number of re-lapses but eventually we will get there if are committed to ‘change’. And finally, like Rick Thaler says in ‘Nudge’ , we need to be the ‘ ‘choice architects’ for our clients and it is definitely our fiduciary duty to do so. There are no good or bad clients!

  • Maria Marsala

    I would say that there are bad clients and there are clients from hell. But there are also good clients and the type of ideal clients you really want to have in your practice/business.

    I would not say that a client who is not helping themselves, after you’ve made recommendations based on their goals, is not necessarily a bad client… just a client whose behavior isn’t helping them.

    But bad clients there are!

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  • Joe Pitzl

    Great post, Michael. And I would add to your commentary that the scale of change we often expect / recommend our clients to make is far more dramatic than we realize.

    It is incredibly important at the outset of a relationship to gain some small victories together…and remember to celebrate them, if only through simply telling them they are doing a great job. Momentum is very hard to stop – the hardest part is simply getting it started.

    Part of our work as planners / advisors is to figure out which areas they are ready to take action with and start to make some progress. Too many of us expect perfection out of our clients too quickly. Aim for progress, not perfection…and progress may simply be moving them from “contemplation” to “preparation.”

    Further, I have been in plenty of meetings in my career where a client came in excited to report, for example, that they cut their spending by $1,000 per month, only to have an advisor immediately remind them they had to cut it by $2,000. Almost universally, any progress stalls right then and there, and more often than not, the client reverts back to their old habits.

    Progress is addicting once the proverbial ball is rolling. Empasizing the “why” instead of the “what” and “how” is paramount to getting started.

  • Daniel

    I have to agree it is very frustrating when you prepare a plan for clients and they don’t implement the plan. As a Financial Planner I have experienced this many times. I personally believe that clients in general want to implement the plan but they may have other issues that are competing in implementation of the plan. I have been researching the effect of past programming on our behavior and our relationship with money. Many of us have not had any formal education on money before we entered the work force. From my research I have learned that 95% of our subconscious programming was done by the age of 12. If we don’t realize that we live only 5 to 1% of our life in conscious realm we are setting ourselves to fail in every are of life especially in finance. When it comes to implementation of a financial plan people are learning new behavior and they have not been programmed to see that if they implement the plan they will have greater success. I believe many of the past programs need to be exposed and we must become aware of this in order to teach our clients that plan is only as good as it’s implementation.

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  • Larry Klein

    I have a simple mind and while I like academic models as Prochaska has presented, I don’t know if I have the patience or determination to apply it. I just wrote a post on a different reason why clients don’t follow what planners say and that has to do with the planner having the wrong communication model: that of an educator rather than a motivator.

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Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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