Welcome back to the 101st episode of Financial Advisor Success Podcast!
This week’s guest is Dr. Moira Somers. Moira is a clinical neuropsychologist who studies the complexities of how hard it is for people to change their behaviors, especially when it comes to money.
What’s unique about Moira, though, is the way that she’s applied her financial psychology expertise not just to consumers themselves, but to how advisors can more effectively help their clients. Specifically by teaching advisors how to better deliver advice itself in a way that actually sticks so their clients really do change their behaviors for the better.
In this episode, we talk about the growing base of research from the medical field about what doctors need to do to make their patients better comply with the drugs and other therapies they’re prescribed. How that patient compliance research is being applied to financial advice to help clients better adhere to their advice, the role of a financial advisor as an adherence partner to help clients follow through on advice, and why it’s unrealistic to expect even well-intentioned clients to always follow through on good advice they may be given.
We also talked about specific steps that financial advisors can take to improve their advice delivery in a way that increases adherence from clients. From better assessing client readiness to actually take and implement the advice, to giving better follow-through support on the implementation of advice, why it can be a good and valuable service to occasionally nag clients, and why Moira starts out every meeting with the simple question, “What would make this meeting the best use of your time today?” to ensure that the conversation is always focused on what really matters most to the client in the moment.
And be certain to listen to the end, where Moira talks about the importance of actually measuring client adherence. Why advisors should consider tracking how quickly and consistently their clients implement their advice or not, and why better delivery of advice that sticks can actually help to both justify and even reduce the cost of financial advice itself.
So whether you’re interested in learning the bests ways to help clients stick to the advice that we, as advisors, give them, how to give clients better follow-through support, and why it’s important to track how consistently clients implement the advice they’re give, the we hope you enjoy this episode of Financial Advisor Success.
What You’ll Learn In This Podcast Episode
- The type of partnership dynamic advisors should aim for. [10:34]
- Moira’s challenge for financial advisors. [12:42]
- What we can do as advisors to improve the likelihood of client adherence. [16:54]
- Important research advisors often don’t take into account. [21:24]
- The simple question that should come at the beginning of every client meeting. [31:21]
- Major factors that influence whether a client will follow advice. [37:44]
- The last question you should ask a client. [44:52]
- How to give better follow-through support. [54:35]
- Why it’s okay – and even valuable – to nag clients sometimes. [58:53]
- How Moira got into her field of work. [1:13:18]
- Where to start with learning to improve client adherence. [1:31:02]
- What advisors could learn from tracking how consistently clients implement advice [1:39:11]
Resources Featured In This Episode:
- Moira Somers
- Money, Mind & Meaning
- Advice That Sticks
- Dan Ariely
- Prochaska’s Stages of Change
- The “Get Organized” Meeting
- How To Give Better Financial Advice That (Actually) Sticks
- Sudden Money Institute
- Certified Financial Transitionist (CeFT)
- Money Quotient
- Kinder Institute
- Brad Klontz Financial Psychology Institute
- FPA Retreat
- Purposeful Planning Institute
Welcome, Moira Somers, to the “Financial Advisor Success” podcast.
Moira: Thank you. Thanks so much for asking me. I’m looking forward to this.
Michael: I’m excited about today’s conversation because you come to us from I guess a little bit of a different background than some of our other guests. You know, you have I guess I could say like a role of consulting and teaching advisors as a part of your work. But I know you come from a background of psychology, of neuroscience, and have spent a lot of time with just that fundamental question of, “Why is it that we sometimes give people advice and the people don’t take the advice?” And, like, what is it that you have to do to create advice that sticks? Which was literally the name of your book that we’ll make sure we give people a link out to if they want to read more of it. But it’s a striking subject to me because I was actually…my undergraduate was in psychology as well.
Moira: I didn’t know that.
Michael: Yeah. And one of the things that struck me just coming into the world of financial planning is, in the world of psychology, like, if you’re having trouble reaching a patient, you try different things. You can try different methods. You can try different theories. You can try different approaches to try to figure out, you know, “How do I connect with this patient and try to help them get to the change that they need?” And in the world of financial advisors, we view this very differently. Like, clients where I give the advice and they take advice are called good clients, and clients where I give the advice and they don’t implement my advice are called bad clients. In fact, in many circles of our industry, you are proactively counseled to fire bad clients who don’t take your advice.
Moira: Yeah. So sometimes they’re even called ex-clients.
Michael: Yes. So sometimes they’re called ex-clients. And so, in this world where…in financial advising, like, either clients are ready and willing to immediately take your advice or they’re soon-to-be ex-clients because they don’t take your advice to follow through, it puts all the onus on the client, and it just…it frames the whole discussion around, like, it’s the client’s fault. The client should be ready to take the advice. And if the client isn’t ready to take the advice, you need to move on and find someone else who’s ready to take your advice instead.
And it frames all of this in a world of, well, you know, naturally, anybody who comes to me as a financial advisor should want advice and be ready and willing to take it. So, if they can’t follow through on it then, like, it’s just their fault and I’ve got to find someone else. And just coming even from a limited undergraduate psychology background, I kind of know like, this is not how behavior change actually works. The number of people who are, like, seeking help at the exact moment they are truly committed to making drastic overwhelming life changes is, like, minuscule small. It’s like searching for needles in haystacks. Most people are somewhere else in the change process, and maybe they’re getting close, and maybe they’ll get there, but usually, they need some help along the way. And there’s nothing that we get taught as financial advisors about how to help clients get to the point that they’ll take advice from us and implement it. It’s pretty much just down to, “I told them what to do. And if they don’t implement it, it’s their fault.”
Moira: Boy, you’ve said a lot, Michael, and my mind is going in a lot of different ways. I mean, the first thing is that I think a lot of people in a lot of professions still run their practices, whether it’s medical or psychology or financial advice that’s being given, they still run their practices in that…I would say it’s almost an old-fashioned way. And there’s a certain efficiency in that. You know, to heck with them if they’re not ready to implement. I don’t have time for this. I guess the…
Michael: It is pretty efficient when you only work with clients who just take everything you say and do it immediately. Like, those are nice clients. Like, I don’t think it’s bad to call those good clients. I guess more my concern is calling the other ones bad clients or ex-clients. Like, it is nice as an advice-giver where you just give advice and people take.
Moira: It’s very lovely. You know, I thought…I had these kind of wild ideas for years that if I could just develop a screening device that would keep the “bad” ones out of my practice, then I would just have a glorious practice. But the more that I’ve done research in this area, and my research started, by the way, with my doctoral dissertation on procrastination, the more that I realize this is not really a personality characteristic. There are very few people on the planet who are globally non-compliant. There are very few people who show up at somebody’s office simply for the purpose of hearing what you have to say and then rejecting it.
Michael: Well, I guess that’s reassuring. Like, we’re not mostly engaged with just psychopaths who just find it funny to come to our office and ask us a bunch of questions knowing full well they’re not going to do anything because it just antagonizes us as advisors.
Moira: Yeah. But it’s also…the flipside of that is that it’s distressing that we can’t always just sort of screen them out of the practice then. And to me, what it was was a matter of really digging into the research about why this happens and getting the very humbling realization that the client is only a small portion of whether the advice will get followed. And that just as much of the variance is accounted for by the skill or the mistakes of the one giving the advice. And when I was taught that and when I really accepted that reality, I guess I was kind of red-faced for a while as I thought, “Oh, I would so much prefer just to blame other people.”
Michael: Yeah, I was going to say like, there’s kind of a loaded thing there. So basically, that was really a nice way of saying, “It’s not the client, it’s you.” It’s us. It’s us all. It’s all of us.
Moira: Yeah. The hard truth is that sometimes it is, and sometimes it’s a number of other things. Sometimes it’s a matter of the advice itself. We know we’d have much more success if we were telling people to eat Cheezies than to knock off the Cheezies. We would have much more success at getting people to save money if they weren’t embedded in a materialistic culture that has billion-dollar marketing budgets aimed at getting them to part with their money. So, the social environment in which a client is embedded also has a lot to do with whether the advice will be followed. The defaults that are set up around some of these things influence behavior.
And so when you realize that what you’re dealing with is really a multifactorial issue, it can lead you either to feeling like, “Oh, I just really want that screening device again to only accept the good clients,” or it can lead you to say, “I can make some tweaks in a number of different areas.” And they may have spin-off effects that are so effective in making the advice easier to swallow, in making sure that there’s better follow-through between what the client commits to and what actually happens. And so rather than being discouraged by the fact that, yeah, sometimes it’s us, I think that can be really encouraging because, in the long run, that’s the only thing we have control over. And if you have control over it, you can begin to shape that in ways that really lead to better outcomes for all concerned.
The Type Of Partnership Dynamic Advisors Should Aim For [10:34]
Michael: It’s an interesting way to frame it. That just, well, until we can come up with a magic screening device that just only gets good clients, you know, some will implement, some won’t. Some will have external factors that make it harder and some won’t. The only part of that you can actually control is literally how you show up as the advisor to try to figure out how to deliver this advice in a manner that at least increases the odds that the person receiving the advice will actually implement it and follow through on it.
Moira: And as I said, even though you don’t have control over the other domains the way you do over you and your team, at least you have some influence over those other issues, including even the influence that you have on the client. So it’s not that one domain of you is the only domain that you can tweak and get better at, all of them are amenable to our influence. It’s just that that’s the one that’s much more completely under our control. The other ones are workable. And so what I usually suggest is that it’s more helpful to think about you and the client as being partners in this. Not just thinking partners, although I love that image, I think that’s such a useful image, but also adherence partners. That both of you have a role to play and how effectively the advice gets followed through on.
Michael: Like, adherence partners. So we’re in a relationship together to figure out how together we can get to the point where you’re more able to effectively implement the advice being given. I mean, it does…there is kind of an important implied point in there. That, I mean, truly, like, a piece of this is just giving the advice, right? Like, “Hey, in case you didn’t know, it works better for your financial future when you spend less than you make,” right? Like, if you didn’t know that piece of advice, that would be very valuable and probably really helpful to keep from constantly racking up debt and going bankrupt.
Moira’s Challenge For Financial Advisors [12:42]
But for most people, the mere advice statement, “If you spent less than you make, you would be able to save more,” okay, that was helpful advice, now help me figure out how the heck I actually do that because I’ve got the demands of my kids and my family and my job and all these other things, and it takes money to do these things, and there’s just not enough money left at the end of the month. So thanks for the advice I should spend less, but unless you can figure out how to help me implement that and do some things different that make it feasible for me to adhere to that advice, we’re not going to get anywhere. And once you get down to, “What would you have to change in your life to make this advice work?” we’re no longer just, you know, one directional, I’m giving you advice world, now we’re in a partnership dynamic, “Okay, here’s the advice of what we want to get to, now, how are we going to work together to get you there?’
Moira: I’m sure that you and many of the listeners will know of the work of Dan Ariely, the behavioral economist who’s done a lot of research on how it is that we are unconsciously influenced by, in particular, defaults and social kinds of expectations and settings. But I have heard him speak on several occasions, Michael, and I quote him in my book, about how he wishes more financial advisors would engage in the kind of conversation that you just almost mapped out there. About, how can people make better trade-offs? When faced with these competing demands for their time and their money, who else could they talk to other than a financial professional? Somebody who understands both the actuarial implications of what is going on but who also understands who they are as people and what their values and their motivations are, and who can help them make the best possible trade-offs.
And he says that every time he talks to financial advising audiences about his fantasy of having the advisors turn into people who have those kinds of discussions, he says that he gets so much pushback from advisors who say, “That’s not my job to have those discussions.” And, you know, he said, “Well, whose job is it then? Who else has that combination of actuarial mathematical investment knowledge, the technical stuff, along with such a deep-seated attunement with the client? If it’s not you guys then who else could possibly do that?” And so I really encourage people to take up that challenge. That as they get better at the personal side of advising, that’s just what happens naturally.
Michael: And I think particularly in, you know, some of the competitive cross-currents happening in our industry right now where there’s all this discussion of robo-advisors and kind of the defense of traditional advisors that says, “Well, no, no, like, anybody can do that computer stuff online, but, you know, I help my clients change their behavior in a way that computers don’t because the computer can’t talk them off the ledge when they’re, you know, freaking out in a market decline.
And I do think there’s some validity to that, but I’ve always been struck that the way we have tended to frame behavior change in our industry, which is usually very directly things like, “I’ll talk the client off the ledge from making an investment mistake in the middle of a bear market” is just a very narrow scope to what helping clients change their behavior really means. If you really want to help clients change their behavior, it’s much more around this broader domain of, “How do we help them actually implement all this advice that we give them?” Particularly for what we do as financial advisors because, you know, I mean, probably no coincidence to your dissertation work on procrastination kind of leading you in this direction, you know, almost everything we do as advisors is basically about advice for delayed gratification, right?
What We Can Do As Advisors To Improve The Likelihood Of Client Adherence [16:54]
So, we don’t get to give the advice, you know, “Eat the Cheezies. It’s okay.” Like, everything we do is like, don’t buy the thing that your neighbor is buying, and don’t get the hot, new item, and don’t spend on this, and don’t spend on that, and save, save, save, which has great long-term value, but it’s entirely about not fun, delayed gratification things that you’ll only thank me for in 30 years and at no point along the way. You know, it’s stuff that is really hard to change behavior because it goes against pretty much everything else about how our brains are wired for pleasure and enjoyment.
Moira: Yes. And much of good medicine suffers from the same barriers. That the best medicine is preventative medicine. And we know that it’s much easier to get people to change behavior if you’re solving a pain point. So earlier this week, I had an abscessed tooth. Let me tell you how motivated I was to take those antibiotics. By yesterday afternoon, which was five days into it, I just…it wasn’t lack of motivation, it was lack of remembering, that I got to the end of the day and was looking at three pills and thought, “Uh-oh, I’m one of them.”
And that brings us to, you know, one of the other reasons to consider working with, you know, not just the “good” clients is that no matter whether you dub people good or bad, the fact is that every single one of them has a glitchy human brain and that the most common cause of not following advice that you have committed to following in the office, the most common cause is simply forgetting. And the more that clients are left to implement the suggestions on their own with no reminders and no supervision, then the more likely it is that it will fall by the wayside.
And sometimes we just get lazy as advice-givers and say, “You know, I’ve done my job. It’s your job to be the grown-up and to take the darned antibiotics.” But what if I just really care about the success of my client because it makes me a better professional to have successful clients? Well, then I’m willing to go that extra step and send people home with a little paper that they can stick on their fridge that says, “Check this off every time you’ve taken the antibiotic. I want to see three checks on this by the end of the day. And because you’re likely to go to the fridge three times in the day, this would be a really good place to put it,” right?
Michael: So it’s the proverbial equivalent of like, tie the string to your finger so that you don’t forget to do the task.
Moira: You know, and what I know as a practitioner myself is that look, there’s a front-end load to doing this as the professional. That you do have to invest some time in getting checklists made up. And nobody pays you for that. That’s just part of what you do to be excellent in your sphere. But I’m married to a pilot. Like, thank God they have checklists. And so I try to…I’ve tried for, you know, past 25 years that I’ve been in practice as a neuropsychologist to really accept the limitations of these noggins of ours and to try and make sure that I do my darndest at my end to accept the reality that brains have limitations. That among them are these biases that we have and these difficulties in delaying gratification. That whatever it is we are most of the time, that when big life transitions hit, we have no idea what we’re going to be like. Because when those same noggins become very excitable or very depleted, what we were in the past may look very different from how we look now.
And so when you start accepting the reality of what it is to be and to work with humans, you’re willing to stop shaking your fist at reality and instead to just kind of dig in with some curiosity and some compassion and some commitment to get better at your craft.
Important Research Advisors Often Don’t Take Into Account [21:24]
Michael: Oh, there’s a piece there that this reminds me of. So I remember, you know, early on in school talking about behavior change, you know, there’s a model out there that says we go through these phases as we’re leading up to making a change. So I’ll do it in the context like smokers. So, you know, there are people who need to quit smoking and, like, they’re just not interested. Like, just not want to make a change. So, you know, giving them advice like, “Hey, you should stop smoking” just is really going to rub off on them. Then maybe at some point, it’ll sort of get through them and they’re like, “Yeah, you know, really, really should make a change to my smoking habit. Not really ready to do anything about it right now, but, like, you know, taken under advisement, I should think about that.” So, you know, you’re at least…you’re making some progress. You’re starting to get ready for the possibility that they’ll change.
You know, then they start formulating a plan like, “Okay, I guess like if I was going to stop smoking, like, I could get the patch. I think I’d be able to do that. And I guess I might have to go to that smoky bar a little bit less because I always just want to light one up whenever I’m there.” Like, you can start formulating a little bit of a plan. Like, you still haven’t actually done anything yet. And only then do you even actually try like, “Okay, this week I’m quitting,” and you stop smoking, and most…I mean, one of the things you see immediately in the behavior change research is most people don’t succeed at hard change the first time. Like, relapse is normal and retrying is normal. So even if you do the thing, it rarely sustains the first time.
And I feel like, you know, in advisor world, it’s like we go through all these different stages of, I don’t even admit I have a problem, then at least I admit it but I’m not ready to do it. Then I start formulating a plan. Then I do it. Then I have to try to maintain it, which I don’t always do successfully. It’s really hard. And as advisors, we treat every client like they’re coming in at that exact moment of, “Okay, I’m fully ready to do exactly whatever you plan to give me. And whatever you do I will stick with forever. Like, just tell me what to do.” So all we have to do is lay down some advice and client is magically solved. And almost no one is at that exact moment of the stage when they come into your office. And even if they are, it usually doesn’t stick the first time. And we just kind of, I don’t know, ignore all of that research, or just I guess never really had awareness to that research. They don’t teach it in financial advisor world.
Moira: Yeah. And that model of change that was put forth by Prochaska was…you know, it wasn’t meant…kind of like the Elisabeth Kubler-Ross stages of death and dying. It wasn’t meant to suggest that this is a linear thing that everybody has to go through. You have to do one stage before you get to the next. It was just meant to sort of encapsulate what their research was finding about how change happens. And sometimes people go completely from, “I’m in denial, this is not a problem,” to very successful and rapid change, not because they were convicted of the need for it but because somebody took it out of their hands and made it happen. So that’s an extreme example.
But the fact is that even if you have the folks who are 100% committed and ready to make the change or to implement the thing, life can still get in the way. They still have a foible-prone brain and they still have a social context in which they’re operating, and things can change dramatically within even hours of their leaving the office. And so the better that the advisory team can be about following up and making things easy for them to fill out and return, the more encouragement they can give, the more advisors can learn about what kind of encouragement is helpful at various stages of the investing process, then the better off they will be as adherence partners. And very encouragingly, not only will their clients do better in the long run but they’ll also be more loyal clients in the long run. The fact is that clients who are sort of serially non-adherent become embarrassed clients and they become discouraged clients.
You know, I don’t know about you, but I have trouble flossing, which is probably why I had that tooth abscess, come to think of it, but, you know, I typically am reminded to floss about three weeks before I go into the dentist’s office because it’s in my calendar and I’ve had this reminder, and I know that I’m going to, you know, have to hang my head in shame that I didn’t do as good a job as I ought to have done. So, you know, I’ve had to invent things like wrapping the floss around the bristles of my toothbrush every single day so that I can’t actually brush until I floss. And that’s become a way of making sure that I follow through with my own intention to do the right thing. And the more advisors can help develop these little hacks for success in financial domains, the more delighted their clients will be in the long run.
Michael: I like that, advice hacks. So we’re learning how to do better advice hacking.
Moira: We are.
Michael: So just to help people actually follow through and implement. Again, like, this, I think, was something that hit me one of the first times I went to one of the…like, one of our industry sessions on behavioral finance. And, you know, I find most sessions on behavioral finance in our world is basically just like a look at all of the research about the dumb things that people do to themselves with their money, right? Like, we’re overconfident in our investing behavior, and that leads us to trade too much and hold concentrated positions. And we’ve got an availability bias that tends to be a bad filter for how we look at our investments. And, you know, just one behavioral bias after another that creates all of these problem portfolios.
And the frustration I always had is, we’d go through a session like this and get to the end, it’s like okay, I get it. Like, you know, my clients buy too much company stock because of the familiarity bias that they hear too much about it at the water cooler and they think they have special information about it, but the truth is they don’t have anything that Wall Street doesn’t have about their publicly traded stock. And then they’ve been successful with the stock because it went up, no fault of their own, and now they’re supremely overconfident in their investing behavior, even though it has nothing to do with them. Like, okay, great, I get it. But, like…
Moira: Now what?
Michael: …I’m pretty sure if I just say to the client like, “Did you realize that you actually don’t know so much about your stock? You’re just over interpreting water-cooler talk and you are extremely overconfident right now.” I’ve never actually tried that with a client. I’m fairly certain I know what the outcome will be, and it will not affect the desired behavior change, right? Like, it’s one thing to say, “Okay, we have all these biases,” and then another to say like, “Okay, well, like, what are the advice hacks?” Like, how do you actually get to the point where people start doing something differently if just telling them, “Do something differently” won’t necessarily get there?
Moira: Well, and I think much of behavioral finance has been at that point of fantasy. I have to say that I described succumbing to earlier in my career, which is that we could just develop these measures of investment styles or cognitive bias, and that will somehow give us the keys to the client’s universe. But they don’t. And they don’t for a couple of reasons, leaving aside the psychometrics of a lot of those instruments, which are not necessarily well validated, the fact is that people fill out those questionnaires in what we call a cold state or a sort of a calm and collected state. And they’re almost hypothesizing how they would behave. So tell me about your risk tolerance. Well, what if you’ve never been through a bear market before, how the heck do you know?
Michael: “Yeah, if the market went down 20%, would you, you know, sell, hold, or buy?” Like, “I don’t know. I guess I’m supposed to say buy because that seems to be the one my advisor is nudging me towards.” Like, let’s say that because I’m in a calm, rational state and I can figure out that that’s what I’m supposed to answer doesn’t mean that’s what I’m going to do when I’m watching my portfolio fall and all the headlines are read on CNBC.
Moira: Yeah. And in fact, what we know is that that is not how people tend to act. Now, within behavioral finance, they’re just trying…it’s a young field, and so, give them some time and they may very well be able to figure out the keys to the client’s universe. But even so, we’re still going to need to have advisory skill around managing their distress or managing their upset and managing the client who’s actually in front of us, no matter what their cold-state portfolio might have been or no matter what it was that the risk portfolio predicted it would have said about and how they would have acted at this point. We need skills for handling each and every client as they go through not only market setbacks, Michael, but life setbacks, widowhood, divorce, all of those things that kind of come up and take a piece out of our mental energy and leave us with sometimes less than the full array of capacity that we would want to have when we’re making some of these big life decisions.
The Simple Question That Should Come At The Beginning Of Every Client Meeting [31:21]
Michael: So can we talk a little bit about kind of advice hacks? I love this label. I’m going to be running with advice hacks and advice hacking in the future. So talk to us a little bit about advice hacks. I mean, I know you’ve done work in this space. You’ve written about this. Like, what does it look like if we’re going to start changing our advice-delivery process to actually get people to implement more of the advice that we deliver?
Moira: I think the first thing is that advisors need to learn how to hush.
Michael: How to hush?
Moira: Hush. That’s a polite Canadian way of saying they need to shut up. Advisors in all professions tend to talk too much. And it’s really hard to learn something if you’re talking. And so getting better at the listening end of things and not just the, “I’m listening because I’m reloading, and I’m going to tell you what I want to tell you as I hear you talk.” But really listening to get to know the client better is a pretty fundamental skill. And then learning to ask the right questions so that the right kind of information comes your way that you can then listen to.
So, one of the first questions needs to be, “What is it that you most want to get out of our meeting today? What would be the most valuable use of this time for you?” Now, you know, advisors might assume because they’re calling in a client for an annual review of the portfolio that the most important use of that time is to go over the portfolio. But that’s the advisor’s agenda. You know, if this is the only time during the year that you actually get to set eyes on the client, what if you started with, “What would make this the best use of your time?” What would it look like if you really honored that?
Michael: So this would literally be like a question I would ask as the meeting is getting started? Like, “Hey, you know, we’ve got a few things to talk about today. You know, I’ve got your portfolio review if you want to go through it. But, you know, just before we get started, what do you want to get out of this meeting today?”
Moira: So, I ask that question at the beginning of every single meeting I have with every single patient, with every single coaching client. There is not a meeting that I have that we don’t start by clarifying not just my agenda for the meeting, but the client’s. If I want to be kind of a…the adjective just slipped my mind. Not Machiavellian, but just sort of… I’m just going to ride the odds on this. Here’s a good reason to do that. The research shows that client satisfaction is directly related to the amount of airtime that a client gets. So the more the advisor hushes, the more satisfied the client is likely to be. Put quite bluntly, we all love to hear the sounds of our own voice, so give a client the opportunity to experience that, for heaven’s sake.
Michael: Which is, like, a straightforward thing to say but is brutally hard in practice. I think particularly for us as advisors, like, they’re paying me to give them advice and you’re telling me not to say anything. Like, it’s hard to resist.
Moira: Right. Right. Well, you know, I teach at a major medical school, so believe me, I work all the time with very smart people who have very important things to say. And we work all the time to get physicians to stop interrupting patients. It’s not that you don’t say anything, it’s just that you give them the opportunity to express concerns, thereby creating much more efficiency in the long run. Again, it’s a front-end load. In the short run, you’re losing the opportunity to talk and give advice. You’re “wasting” a little bit of that opportunity. And I put that in air quotes, you’re “wasting” it. But in the long run, that creates more satisfied clients, and it creates much better outcomes in terms of the advice that you were going to give anyway. So yeah, we spend hours and hours in medical school training physicians not to interrupt. And I think over the years, we’ve managed to move the bar from about…it takes the average physician 18 seconds to interrupt an average patient. I think we’ve…when we started out, I think it was 13 seconds, and now we’ve nudged it up to 18 seconds.
Michael: I’m just imagining being the researcher who just gets to sit behind the window with a…like, you click the stopwatch when the patient starts talking and then you just snap it again and see how long it takes them to get interrupted.
Moira: Yeah. Yeah. I’m thinking those researchers have a lot of dents in their forehead where they keep smacking themselves with the clipboard, “Ugh, I told them not to do that.” But, yeah, so just know that when you say this is hard, yeah, this is hard, and it’s worth it.
The second major thing that, you know, we teach… And so I keep going back to the medical adherence literature, Michael. And forgive me for that, but that’s just where the best research lies. That this awareness has been present within medicine that maybe we should get out of client-blaming and figure out how to actually get people to take these extraordinary medications or how to benefit from these marvelous surgeries that weren’t even options for all of human history. Now, how do we get them to work?
Michael: Right. So same dynamic, right, of, you know, good patients just take the prescription that I give them and don’t ask me questions. Bad patients, I keep writing the prescription and then they don’t take all the medication, and then they do badly and then the disease builds up a tolerance to the drug and now we’ve got all sorts of other problems because the bad patient wouldn’t take my prescription the way that I wrote it.
Major Factors That Influence Whether A Client Will Follow Advice [37:44]
Moira: That’s right. And so, you know, about four decades ago now, there grew to be an awareness that it really doesn’t matter how great we get at, you know, even genetic profiling of what kind of medication is going to be best for this kind of patient if we can’t get them to take it consistently. And so, another really powerful and easy-to-implement thing that’s come out of that adherence literature has been something called the readiness assessment. And that is ascertaining that the client and you share the view of the problem in the solution, that the client is ready to act on it, as in is convinced that this will meet their desires and their needs and that they’re convinced that they actually can do the thing that you’re asking them to do or that they’re promising to do. So those three things: agreement, conviction, and confidence are the things that you have to look for before you let the client go from the office.
And if you don’t have those three things, then know that the odds of following through are much diminished. And that doesn’t mean that the session was a bust. Sometimes people do just come in to kick the tires. Sometimes people do need multiple iterations of advice. They need time to let things kind of percolate. They need time to let their life settle down. But just know that if you don’t have those three things: agreement, confidence, and conviction, that it just is likely to not happen, at least not right away.
Michael: That’s an interesting framing. I feel like it almost goes back to a part of I guess Prochaska’s stages of change or just the screening tool we were talking about earlier. Like, you know, question number one, if you’re coming to me for advice, are you actually ready to act on it? Which is an interesting question because I think our natural presumption is always well, yeah, of course, like, that’s why they’re in my office. That’s why they’re hiring me as an advisor.
Because if I can even reflect back to client situations we’ve had where it wasn’t like…you know, I certainly had a few clients over the years where, you know, if we said like, you know, “You’re here in our office to talk about your financial situation, like, are you actually ready to implement our advice to make changes,” I would have gotten an answer as something like, “Nope. Wife told me I had to be here.” Like, not there to change, there because they’re having a marital squabble and the conclusion was that he needs to see a financial advisor, so he’s shown up, but he has no interest in actually taking our advice. He’s there because his wife said he had to be there.
And, you know, had we asked that in advance, might have shaped the meeting a little bit differently knowing that he had no actual intention of taking the advice, but, you know, maybe we can nudge him in a positive direction of getting ready to take the advice the next time we meet. But just trying to give him the advice is going to be a failure because he’s literally not there to take it, if only we asked and discovered that in the process.
Moira: And finding that out and being deliberate about asking it doesn’t mean, as I said, that this session has been a failure. The earlier in your appointment time or your session time that you find that out then the quicker you can pivot and find out what might you have agreement on? What is the person ready to implement on? Is there one little step of the advice that they might be ready to implement? So maybe you have an agreement that they’ve been overspending and this is not likely to end well, but they are not ready to start tracking their spending. They are not ready to cut up their credit cards or do any of that sort of list of things that we all think of as being the next step to dealing with the overspending problem.
But if you ask…you know, if you’ve ascertained that you at least share the understanding and the agreement that this is the next step that they want to take, that ought to be taken, what portion of it might they be able to do? Because, by the way, the instruction to track your spending has about a zero percent success rate if it goes out for longer than about three weeks or four weeks. The validity of the data you get back is suspect, and after about a month, people just…they just throw the whole thing overboard. It’s a very rare client who will continue to do that. But you may, for example, get them…you may be able to nudge them towards some aspect that may do them some good. Maybe, for example, they would agree to turn off one-click ordering. Maybe they would agree to gather up all of their credit card statements and bring them into the next meeting with you. And if you’re a true adherence partner, maybe you could offer to help them do that so that you’re more likely to get good data out of the exercise anyway.
So there are all these ways, as I said, of getting better at it, and we just have to start learning what those are. So it’s the difference as…and you divide your week according to the two aspects of being a financial professional. It’s the difference between the technical stuff and the personal stuff. And most advisors have to be good at both. Both sides, as Susan Bradley says, are equally important and equally complex. And if you think, you know, tax laws are complex, then just go over and look at some of these family dynamics of some of the, you know, fourth generation wealth builder kind of stuff. Yeah, she’s right, that’s equally complex. And it’s equally important because it’s the personal side that drives all decision-making.
The Last Question You Should Ask A Client [44:52]
So I’m also struck by this discussion around agreement, conviction, and confidence. You know, there’s a piece here that, again, I know is well recognized in the behavior change literature in psychology and is basically never discussed, as far as I know, in our financial planning world, which is that question at the end of asking the client, “Do you think you can actually do this change,” that they’re working on? You know, because, I mean, obviously, you sort of think about like, if you’re convinced that you won’t be able to successfully make the change, there’s really no reason to try. And it doesn’t have anything to do with whether we all agree there’s a problem or that they’re ready to act. If you are convinced up front that you’re going to fail in the effort, you just don’t even try. Or at best you self-sabotage yourself shortly into the process.
Moira: Well, Michael, I’m sure… You know, we’re talking about this as though it only happens to other people and not to us. But I’m sure many people in this call will have had experiences of really recognizing that it was time for them to change something and being really motivated to do it. Maybe it was that they had to lose a significant amount of weight to deal with a health issue and they knew, you know, that this was the right thing and they were motivated to do it. They had all of the whys lined up, but they had very little confidence that they were going to be able to do it because they’ve tried to do it 1,000 times before.
And so, what that sets you up for is, you know, that’s not a lack of motivation, that’s just frustration. The motivation is there. The know-how or the ability to anticipate ahead of time, how are you going to handle these inevitable setbacks? What got in the way before and how can we address that? That’s the third stage of that process, of getting at the conviction piece. Otherwise, you know, you’re going to have these shallow-rooted efforts that will fall off the radar in response to opposition that might come from family members. That will fall off in response to the first time you go off the diet and you start labeling yourself as lazy and undisciplined. So we need to get better at really getting to know what the client knows about himself or herself. What have they tried in the past? What’s been successful? What hasn’t been successful? Who in their life is going to be upset if they actually follow your advice? Is there anybody who would be really supportive of this? How would we enlist their support? What are we going to do about the haters? What are we going to do about the detractors?
So this becomes really germane, for example, when you’re working with parents who have adult children that are constantly putting the touch on them to support the adult children’s lifestyle. And so everybody may agree that the thing to do is to start setting limits. We may have agreement on that. And they may be in deep touch with the why. That if they don’t do it, they’re going to sabotage their own retirement. If they do this and they do it successfully, that they’re going to have much more independent and justifiably proud adult children who know how to stand on their own two feet. So now we’ve got agreement and we have confidence…sorry, we have conviction that this is the right thing to be doing. But then we ask them, “And do you think you’re going to be able to do this?” And we find out that their confidence is very low because those children are…
Michael: I just can’t say no to my daughter.
Moira: Those children are not going to be raving fans of this plan. They’re going to get a lot of pushback on this. And so, again, it comes back to the advisor to figure out, “Oh, do we need a family therapist in here? Do I need to help model or roleplay these conversations? Do I need to offer to have the meeting in my office? Do I need to offer to meet with the adult children?” You know, there’s all kinds of ways to effect a more positive outcome than to just document that you recommended this and, you know, left them on their own to implement.
Michael: So, you’ve talked about the need to learn to hush, you know, readiness assessments around these three questions, you know, do we have agreement about the actual problem here? Are you ready to act on the advice I give you? And do you think you can succeed in this? Are there other advice hacks or, you know, tactic strategies, other things that we can do to try to help clients actually implement?
Moira: Oh, there’s lots and lots, Michael. A whole series of advice hacks has to do with getting into the nature of the advice itself that we’re giving. So I gave the example earlier of rein in your spending. That’s not just a single behavior that we’re asking people to change. That has got so many steps to it. Or bring your spending in alignment with your earning. That has so many steps to it, but we treat it as though it were a single piece of advice. You know, like one little onesie outfit that you just have to put on.
Michael: Right. Like, just, spend less. Like, are you ready to spend less? Good. Spend less. Problem solved.
Moira: Right. Right. So here’s another example of something that isn’t actually just one step. Get your will drawn up. If we were to take that to a productivity guru, say somebody like David Allen’s Getting Things Done, if you know that model, he would say, you know, “That’s not just a one-step command. Does this person have a lawyer? Does this person know what an estate plan looks like? Does this person have the right questions that they’re going to need to be…have answers to before a will can be drawn up?” And so one of the advice hacks for especially those pieces of advice that are preventative in nature and that aren’t solving a current pain point is to bring them into much smaller chunks if somebody is balking on getting it done. And wherever possible, to offer support for the implementation. That’s another advice hack. Not just sending it home so that it’s completely dependent on that person’s memory or willpower, but learning how you can provide appropriate reminders to people and offer support for those things to happen.
So I know several advisors who have, like, will writing workshops for their clients. Where they have estate lawyers who come in and they give people really helpful questions to get answers to before they even show up at the lawyer’s door. I know some advisors who offer to have the meeting with the lawyer in their office, who offer to call up a lawyer of the client’s choosing and put that person on speakerphone so that some of the reservations or the uncertainties can be dealt with right on the spot. So there are a number of hacks that have to do with the advice itself.
Michael: Yeah. I had written about one years ago on Nerd’s Eye View that I know a number of advisors now have implemented, where, you know, we always talk about the starting point for financial planning is, like, I need data. I mean, I need to know what’s going on in your financial situation so that we can then give you advice about how to change and improve it, except, you know, the clients that need the most help are usually the ones that are the least organized, which means I can’t even give them the advice because I don’t even know what their financial situation is and they’re having trouble articulating it. So we give them a data gathering form and ask them to fill out, you know, pages and pages of information that at best is arduous and at worst they, you know, getting back to your agreement, conviction, confidence, like, they don’t even think they can do it because they know they’re not financially organized, so they don’t even bother to try on the data gathering form.
Versus just going to them and saying like, “Look, we work with a lot of clients. You know, some of them are pretty well organized, some of them are not. You know, we don’t judge you either way. We’re just here to help. So if you’re one of those folks who knows maybe you’re a little less organized, it would be difficult to fill out a form with all your information, like, I’ll tell you what, just bring all your boxes in, you know, shoe boxes or wherever it is, you throw all the envelopes that you’re probably not opening, just bring them all in, we’ll sort through them here, we’ll get you organized. When you are done, you will go home with a box with all your files properly sorted and organized. We’ll do it for you right here. You will never feel more organized in your life than when you leave our office after the next meeting. And while you’re here, I’m going to make copies of all the financial statements that we go through in the envelopes so that we get the data we need.”
Moira: Oh, that is so brilliant. That’s exactly the kind of thing I’m talking about.
Michael: And, you know, instead of calling it a data gathering meeting, they call it a get organized meeting because that’s the client’s point of view on it. Like, come in and I will get you organized. And while we’re going through that process, I will make copies of whatever financial statements we need to make copies of so that I also have all of my data at the end of the meeting. But, you know, no client is excited to do data gathering, but disorganized people are pretty excited to feel like they’re getting organized for the first time.
How To Give Better Follow-Through Support [54:35]
Moira: So Michael, that’s absolutely brilliant. And that brings us to one of the other whole areas of advice hacks, which is, what can you and your team do to be the safety net or the, I don’t know, the steel wool that blocks all the mouse holes where all of the data ends up dribbling out? What can you and your team do that provides supervision and support for the stuff that tends to not get done? And what you just gave is a perfect example of that. Now, you may get pushback on that because, again, this is like a free service. It’s a value-add, but what you’re likely to get is a couple of things. First of all, grateful people. If nothing else, you’ve done a service to them, and even if they don’t become your clients, you know that you’ve got a jewel in your crown. But if they do become your clients, what did you just get? Other than gratitude, what you got was way better data than you would have gotten had they been left to their own devices.
You wrote a really compelling article, I think it was last year, about clients who have secret other advisors, sort of financial infidelity with the other advisors. But, you know, that was a great example of how getting accurate data is one of the biggest challenges that you guys face. And perhaps…you know, people have every right to not disclose if they don’t want to, but sometimes they don’t disclose, and that’s an unwilling or an unconscious thing. And so what you’re doing is helping to plug some of those holes anyway.
Michael: Yeah, it’s…as you said, there’s kind of the willful like, “You know, I don’t want to tell my advisor about this account because I’m afraid they’re going to solicit it,” which unfortunately does happen sometimes. It means, you know, be cognizant about how aggressive you’re trying to get those dollars or rollovers if that’s your model. But there’s also the clients that just, you know, genuinely forgot about some…I mean, it sounds a little crazy, but as you said, like, you know, we do forget about even important things like taking medication for things that really were painful, like, 72 hours ago. And as soon as the pain goes away, you forget about it or lose track of it or just your mind is on other things, and suddenly stuff slips through the holes.
You know, I’ve heard it. You know, you used the term earlier, adherence partner, I’ve also heard a couple of advisors lately starting to frame themselves as saying, “I’m your accountability partner. You know, part of what I’m going to do for you in our advice relationship is I’m going to be the helpful nag when sometimes you just need to be nagged about getting something done and making sure that it’s done before our next meeting. And, like, I’m not doing it to be mean or a nuisance, you know, let me know if it’s becoming a problem.” But I think for most of us, we can acknowledge that there may be times where, like, I really want to change or do something or get something done, but I still know I’m probably going to let something slip through the cracks. So, like, as long as you’re nice about it, helpful reminder is really actually just helpful and not annoying. And that’s a role that we get to play with our clients.
Moira: That is true. You just need to ask permission, the way you described it. You know, “I’d like to be your accountability partner. I’d like to be able to nag you when important stuff needs to get done. Here’s what I see is the benefit of that. What do you think?”
Michael: Well, and just saying…even as you’re saying that, as I’m thinking about that, like, how often do we have a conversation with clients that just says, you know, “I know sometimes you’ve got stuff to work on that slips your mind and you don’t follow through on it, is it okay if we occasionally give you reminders and a little bit of friendly nagging when there’s something important that needs to get done?” And just let them answer. Hopefully, yes, but just let them answer. And then, you know, your CRM reminders are now a value-add to the client just because they weren’t good at setting their own reminders.
Why It’s Okay – And Even Valuable – To Nag Clients Sometimes [58:53]
Moira: You know, I was consulting to a credit counseling agency a while back, and we looked at their data on sort of when did the structured repayment plans, when did they start to all go to pot? And it turned out it was within…it was after the six-month mark. And they said, you know, “People can maintain this change for about five or six months but then Christmas comes or then, you know, the school fees come up and then things just fall off the rails.” And I said, you know, “That is a compelling hypothesis, but do you have any data to suggest that’s what’s going on?” And they said, “No, that’s just our gut sense.” And I said, “Well, you know, let’s keep that one active, but let’s see what else is going on.”
Well, it turned out, Michael, that at the 6-month mark, they stopped sending reminders or encouraging notes because they figured after 6 months the habit was ensconced because somebody had told them that it’d only take 22 days to form a new habit or… You hear all kinds of wild range on that one. The truth is you can be doing something for 1,000 days in a row and then forget. There is no point at which any habit is guaranteed to carry on. Life can get in the way. And so all that we did was reimplement the encouraging notes. The, “Hey, you are now 25% of the way there.” We focused on something called the small area hypothesis, which is that you work on the smallest portion. You emphasize the smallest portion of either what needs to be done or what has been done. So, at the beginning part of a repayment plan, what you’re focusing on is the number of months that they’ve been doing it, as opposed to the daunting number of months that remain. So we focus on, “You’ve done six months in a row, now, you’ve done seven.”
Michael: Right. Not the, “You only have 172 months to go.” It’s just depressing to anybody.
Moira: Right. But as soon as they hit the halfway mark then you switch and you start, you know, “You are now 60% of the way there, you only have 42 left to go.” That sort of thing. But the point is that all that was needed was a nudge from the team in the form of encouragement and support. All they needed to do was to continue to send out these automated reminders. It wasn’t that they needed an encouraging phone call every month, they just needed acknowledgment. And that was enough to keep them on the path, or it was enough to get a lot of them back on the path. So we know… this always makes me laugh, do you know why married people live longer?
Michael: Like, I can think of some bad joke answers, but what’s the good answer?
Moira: Well, you know, part of it I think has to do with loneliness and all that. You know, that there’s a built-in buddy. But one of the things that the built-in buddy does, and in all seriousness, this is where a huge amount of the variance in why married people live longer seems to come from, is that married people health-nag. There’s somebody there to remind you to take the pills. There’s somebody there to say, “Look it, you’ve been coughing for 16 days in a row. This is not just a normal cold. Get to the doctor. Put down that Cheezie!” And we really do influence each other’s behavior through this kind of health nagging.
Michael: Oh, man. So the takeaway is, like, that nagging spouse literally is increasing your life expectancy.
Moira: Exactly. Exactly. And why I laugh is because nag is such a negative term, but it has such a positive effect. And I think about, what if we could actually turn those reminders into things that were welcomed, that were fun, you know, those automated emails that go out, those monthly market updates that are so flipping dry that nobody even opens, what if we could turn those into behavioral equivalents of health nags but that actually solidified client’s loyalty to us rather than just checked a box in terms of yes, we have kept people updated? That’s part of how I would like to see this.
Michael: I guess the one caveat is my spouse can continue to nag me because I did do that whole till death do we part commitment thing. As an advisor, this is a little bit more tenuous. Like, I want to nag you exactly enough that you implement and not so much that you fire me, because you can do that. Which I guess then lead you down the road of like, “So how do we turn reminder nagging into something that feels a little more positive or at least more constructive and permission granted because it gets you to good outcomes? But if I do it in a way that annoys you, I will get fired.”
Moira: Right. Right. And so that’s why asking permission is really important, and especially if this isn’t the kind of client that you have to do this with all the time. But if you got their permission three years ago and now there’s something that they haven’t been doing that they really need to get done, you can say, “You remember a couple years ago when I asked you for permission to bug you when something really needed to get done? Well, this is it. So the next stage is I’m going to camp out on your front lawn, which might really be embarrassing to both of us.” So, you know, there are ways to do it with humor and grace, and every advisor will do it differently, but the fact is that clients who follow through are clients who are more satisfied with their advisors. Now, that’s one of those things where correlation does not always, you know, prove causality, but there is actually some research that these things are directly causally-related.
Michael: Well, it’s not hard to imagine like, “I hired the advisor and I actually implemented their advice and my life actually got better.” I would like to hope that does show a direct causal relationships than be more satisfied with the advisor at the end of the process.
Moira: Yeah. And sometimes, you know, when I’m talking to advisors about why people seek advice, that was one of…you turned that little chapter of my book into a neat little pictogram thing.
Moira: But what I say about that list is that look, this is the advisor’s alpha right here. And the client may not be aware that this is one of the services you’re providing for them. You know, they’re not going to come in and answer in response to that question, “What would make today’s session the best use of your time, energy, and money?” They’re not going to come up with any of those 10 items on that list. “Oh, I want to feel safer. I want to have somebody else to blame.” But the fact is that you can show them that that is the value-add that you give. So not only, for example, are you saving them time in the short run by preparing…going through that messy old box of receipts with them, but you’re also saving them time in the long run because they were able to get their taxes done this time. And if you’re the tax guy, you’re saving them time not only by doing the tax form yourself but by what you saved them in not having to have the meeting with the nice man from the CRA or the IRS in going over the mistakes that they made.
And so these are….you know, advice is a very complex thing, and sometimes it’s up to us to kind of prove our salt, earn our salt, and to demonstrate that we have earned our salt. Not by rah-rah, “This is how great I am,” but, you know, “I just want to congratulate you the client that you did this.” Most people or many people don’t do this. Or, “You have now joined the overwhelming mass of people who have done this to great success.” And you can turn it back to them, but I think it’s still really important to recognize that they do want to feel more confident as a result of their meeting with you. That if you’re giving the kind of advice that lands well, it always has an emotional component to it. And that emotional component, at the very least, will involve a sense of settling that you’ve solved a problem, that you’ve helped them reestablish homeostasis in their being that, “Uh, you scratched that itch, you solved that problem, and that’s what I came to you for.”
Michael: Yeah, I was struck by this section of your book and sort of this discussion of just why is it that someone really actually seeks out financial advice? And, you know, we always kind of think of as like well, you know, to get my expertise so I can give you the info about what to do. And the point that you’ve made is really like, it’s basically never that. That may facilitate something else, but, you know, as I joke sometimes, like, no one wakes up at 2:00 in the morning in a cold sweat thinking, “I’ve got to have me a financial plan. I just can’t bear this. I’m going online at 2:00 in the morning. I’m going to find someone who will make me a comprehensive financial plan.” Like, that’s not the actual thing that makes us feel unsettled and have anxiety about our financial situation and wanting to seek someone out.
Instead, it gets to other pieces instead. It’s, I’m overwhelmed because I just don’t know what to do. Which means I’m not actually seeking advice per se, I just need someone to reduce the complexity and get this down to something where I know what I’m supposed to do next because I just literally don’t know what to do next in my situation. Or this is just an awkward thing and I just don’t like doing it. And if I can just delegate it to somebody. You know, I hate doing investmenty stuff. So I just want you to do it because I don’t like doing it. Not because it needs to be simpler. I’m a smart person, I know what to do, I just don’t want to do it. You do it. That’s a completely different reason to engage an advisor.
You know, I have gotten to the point over the past couple of years where one of the first questions I virtually always ask every prospect I’m ever talking to is just asking them like, “What brings you here to our office?” Or to this meeting if it’s virtual. Like, you know, “I get it. You’ve got some financial stuff going on. We’ll talk about that. Like, something got you to the point where today you decided to do this meeting or last week you decided to contact me and say, ‘I need a financial advisor, can we meet?’ So, like, what thing is going on that made you so unsettled that you needed to come and do this meeting now of all days and weeks?” And it gets pretty illuminating about what the thing is. And while I’d never thought about it in this frame before, like, it’s almost always one of the 10 things that you list here, or I can at least connect it directly back to one of the 10 things here. And it’s never literally just about the advice.
Moira: Yeah, because the advice is just the means to the end that they want to experience, which is safer or more comprehending, less overwhelmed, more supported.
Michael: I just don’t want to be responsible. Like, we definitely have a few of, “I don’t want to be blamed for this.” I think you had framed as just like, to have someone else to blame. I mean, we have a few couples like that, where husband engaged us because he knows that whenever he makes a bad investment decision that doesn’t go well, his wife gets really upset at him. And he’s actually done very well, but he just doesn’t want to deal with the blame when things don’t go well. So he wants us to do it so that when the market goes down, he gets to sit with his wife and yell at us instead of being yelled at by his wife.
Moira: You know, that one always makes me laugh, but it’s true. And you’re most likely to see it in couples. At least that’s been my experience. They’ve been around. They’ve had the same argument or the same…you know, they’re wandering down the same piece of the garden over and over again and they’re just, “Okay, let’s see if we can punt to somebody else on this one.” And a more positive way of saying it is that they want to avoid self-blame. They want to avoid self-regret.
Michael: They want to cause me regret. They want to cause Kitces regret instead.
Moira: That’s why they pay you the big bucks. Yes.
Michael: Yeah, that’s why I get paid, because, you know, sometimes it pays to be a punching bag when clients need to unload.
Moira: You know, I think we’re…you know, buckle up because it looks like we’re about to go through one of those periods again, or at least we are in Canada. Once again, this will be the first bear market that some people have experienced in their lifetime. Either they weren’t old enough to be investors before or they weren’t investors before, and you’re about to see the limitations of all of those fancy little risk profile analyses that they filled out in the cold state now that they’re in a hot state, where the feathers are hitting the fan about what it’s really like to be opening up a statement and find out that you’ve lost $5,000 or $50,000 this past month alone. And it’s a very different reality.
How Moira Got Into Her Field of Work [1:13:18]
Michael: So, how did you come to this work of studying how advisors give advice and how to make our advice stick more? Like, I get there’s some work out there in the medical realm and you’re applying some of it here, but just who wakes up one day and says like, “Hey, I think I’m going to study how advisors can give better advice?”
Moira: Yeah, it’s a kind of a weird pathway. It started within my own practice because very early on, I was identified within the hospital settings as somebody who knew something about this adherence piece, based on my doctoral research, and applying that to various patient populations. And so I became, you know, kind of the doctor that you would refer to if you had patients who weren’t really making progress, and would help them dig into their why for making the change and their how for getting there. But with respect to the money piece, what I began to notice shortly after practicing was that there was this glaring deficiency in my own training. I had paid full-time university tuition for 11 years, Michael, through my undergrad and doctoral and postdoctoral training, and do you know how many lectures I got on money? I got two that even mentioned money. Two in 11 years of full-time post-secondary education as a psychologist.
Michael: Full-time, not inexpensive secondary education.
Moira: Right. So in case you want to know what those brilliant take-home messages were, we had one lecture on poverty as a determinant of health. So the message is, don’t be poor. It’s bad for you. And the second lecture that I can recall that even touched on money had to do with bipolar, manic-depressive illness and how people in manic stages often spend recklessly. Now, again, there was no take-home on, “Okay, so what should we actually do about that?” But it was just, you know, heads up.
Well, what happens then when you actually get into real-life practice working with real-life individuals? You start to recognize, “Oh, you know what? Every year the American Psychological Association publishes these wide-scale surveys of the population and ask them what their biggest sources of stress are, and every year money tops the list.” And it beats out health concerns and relationships. And moreover, once money concerns are present, it exacerbates the stress in those other domains. So if you have housing concerns and you hit financial stress, you can bet that your housing concerns are going to be affected by that. You can’t move out of the unsafe neighborhood that you’re in. We know that marital fights about money are associated with poor outcomes than other kinds of marital fights. And we also know that they’re associated with nastier fighting techniques. So when couples are fighting about financial issues, it gets ugly fast compared to when they’re fighting about where they’re going to spend Christmas.
Michael: Do we know why or is there a working hypothesis as to why? That’s just an interesting phenomenon.
Moira: I think because it so profoundly touches on these deep-seated lessons about what’s valuable and what’s important and what isn’t. And they’re so deep-seated, they’re unconscious. So we don’t even know what we’re fighting about, we just know that we feel profoundly unheard or we feel like we’ve got to kind of up the ante in order to be heard or to have our point of view win.
Michael: Right. You know, if my framework is, you know, money equals success then when you tell me not to work so hard because I’m not spending enough time with family, you’re telling me to not be successful, which creates anxiety for me. And then I say, “Well, you know, you should spend less then we…”
Moira: You should work harder.
Michael: Yeah. Well, you should spend less and then we wouldn’t have all these money problems where I feel like I need to work harder. But, you know, spending is actually about how you spend time with the kids. And you want to spend more time with the kids, so it’s more money. And I’m taking the kids away from you by telling you to spend less. And all of a sudden, we’re spinning off the wheels and we’re not actually fighting about money, we’re fighting about the definitions of success and valuable time with the kids. And money unwittingly became proxies for all of these things.
Moira: Sure. And it’s because money…there is not a single domain of our life that is untouched by money. It is so interwoven into everything that we do. So that’s my armchair answer to why those things tend to escalate and get uglier fast, faster than fights about any other domain.
But anyway, that was all by way of saying that on the one hand, we’ve got all of this information that says money is the leading cause of stress or the leading source of what people say stresses them out. And on the other hand, we’ve got the people whose job it is to address stress, who’ve received absolutely no training on how to address it. And what I began to discover really quickly in my career as a clinician was that it wasn’t so much net worth that was the strong predictor of how quickly people would recover from accident or illness, that was kind of a proxy for their relationship with money.
So, for example, if you’d been able before you were in this terrible accident to rein in your spending in alignment with your earning, you could call upon that habit to good effect after you were injured. And it wasn’t that, you know, it wouldn’t be hard, but it’s just that it was already in your repertoire. Or if prior to developing this challenging illness you’d been able to have productive money conversations with your spouse and your children, you could once again call upon that skill to good effect now that you had to have that conversation under daunting circumstances.
And so, I began to crave skills really to help people have those more productive conversations and to develop better financial habits, even when they were already well ensconced in the health problem. And so, you know, I got accreditation within financial recovery, you know, helped people work with their spreadsheets. And then I would…developed a bit of a reputation and got executives being sent to me who were earning a gajillion dollars a year but spending a gajillion and one.
Michael: So same spreadsheet, more zeros.
Moira: Right. Right. And so being able to help get into some of the psychological aspects of this. And then it just struck me as I began working with more and more financial advisors who were referring some of these clients to me that it was the financial advisors. You know, I could have a bigger effect if I just taught the financial advisors how to be adherence partners because it took a long time for me to uncover the financial truths of people’s lives, but the financial advisors had that already. And what they needed was to develop some skill in working with the personal side of things. So I just became invited really kindly and graciously into more and more settings to train people to do that. And it’s been a hoot. So the book came out of a request to bring some of the work I was giving to individual firms or organizations and just to bring it to a wider population.
Michael: And we’ll make sure we have a link out to the book as well. I really do highly recommend it for advisors. It’s a very interesting read on just how to look differently at literally what we do in the advice relationship with clients to help clients just implement and follow through better and actually do all that behavior change stuff that we talk about that you have to get them there. So this is episode 101, so if you go to kitces.com/101, we’ll have a link out to Moira’s book if you want to get a copy and give it a read. But I was fascinated by reading through the book.
Moira: Well, thank you. I’m glad you liked it. You know, I know that other times you’ve asked advisors about sort of their practice management models, and I have to say that running a career as a financial psychologist has a few inherent financial challenges to it. So if you’re working with people who have nothing because of their financial behaviors, it’s often difficult to make a living that way. And so, I’ve been really keen on those EAP programs, Michael, that offer some sort of financial well-being.
Michael: Okay. Yeah, employee assistance programs that are trying to do financial wellness, financial well-being through employers?
Moira: Right. And so what they often do is bring in financial planners to give education or to help people make better decisions when they’re setting up their plans other than just going with defaults. The evidence is that, and I think recently you…yeah, it was on your podcast. I heard about some of that stuff. Getting involved in setting up an EAP as a financial advisor, there’s so much that you can point to in terms of the value to the company for that. The last time I looked into that research, I think it was a six-fold return on investment that it gave the company to bring in an employee financial wellness program. It’s not only things like your…the direct costs of, you know, happier employees who have less absenteeism, less…a need for fewer mental health days, less physical illness, but also things like the direct cost to HR in terms of fielding calls from creditors. Having to fill out forms around bankruptcy or… What do you call it when the government automatically takes…?
Moira: Garnishing. Yeah, garnishments. Just that kind of return on investment is also quite compelling. I think that most HR budgets have at least a 15% devoted to dealing with financially stressed employees in those kind of costs before we even look at things like absenteeism. Just filling out the dang paperwork for these folks and responding to calls is a big part of HR budgets.
Michael: That’s fascinating. HR firms allocate…yes, firms allocate as much as 15% of HR costs to supporting financially distressed employees. I have been fascinated lately by just the ways that financial advice and wellness are starting to evolve beyond just, you know, “Look, we try to give advice and hope people hire us for our advice and then we get paid and compensated for the advice that we give,” but how this reaches more people more broadly and just, at the most basic level, someone’s got to be able to make a business case in order for this to work.
That the nature of financial planning and financial wellness through employers, because they can make it back on better adoption of employee benefits, reduced turnover, you know, reduced absenteeism because they’re not dealing with health or financial stress issues that respond by financial stress, or as you point out, like, 15% of your HR costs because you’re dealing with garnishments and bankruptcies of employees, like, it makes an interesting business case for more financial planning in the workplace beyond just saying like, “Hey, this is a good thing to do, you know, in the spirit of altruism for your employees.” That, like, you can make a business ROI case for it as well. Same thing as like…
Moira: A very strong business case. Yeah.
Michael: …life insurers trying to promote, you know, health and wellness because if you just do the health and wellness things, you live longer and they don’t have to pay out their life insurance soon. Like, just, there’s a business case for life insurers to help you with health and wellness initiatives that actually work. Which I think is why you’re seeing, you know, now companies like John Hancock rolling out, you know, digital health tracking to get better deals on insurance.
Moira: Right. So what you said earlier about nobody wakes up at 2:00 in the morning saying, “Oh, I really wish I had a financial plan,” I think companies…you have to think about a pitch to a company in the same way. They don’t say, “Oh, I really wish I had a financial wellness component to my EAP,” they say, “If I have to take one more call from that credit counseling or from that credit card company, I’m going to lose my mind.” And so understanding where the stress points are, where the pain points are for many of these firms, and just keep in mind that financial stress is the most highly reported, commonly reported source of anxiety.
And it doesn’t just come from the American Psychological Association, it comes from organizations like Price Waterhouse Cooper and many, many of the organizations that have the financial guns to collect this wide-scale population data. And it always comes back to that when you’re surveying adults. When you survey teenagers or younger people, you find out that the biggest sources of stress they experience have to do a lot more with the, you know, cyber kinds of things and bullying and those kinds of stuff. But when you’re looking at adults, this is where the stress is. And that’s where the pain point is. And again, that’s what is most likely to get people to act on advice if you’re addressing a current pain point.
Michael: So, like, do you frame yourself as a financial psychologist? Like, is that how you would characterize the work that you’re doing?
Moira: No. I think I’m the only one in Canada. So most of the time if I say I’m a financial psychologist, I mostly get that “Scooby-Doo” kind of, “Ugh, what is that?” I still think of myself mostly as a neuropsychologist who happens to be doing consulting and coaching with financial professionals.
Michael: And so, what does your world look like? Like, are you…do you work a bunch directly with advisory firms? Are you training advisors? Are you still doing stuff with consumers directly as well? Like, what does…?
Moira: Not so much directly. I still have a clinical practice where I see people with neurological diseases and significant physical or mental health challenges. I love that work, and so I still do that two days a week. But the rest of the time I’m generally doing either executive coaching or consultation and training with either small private financial firms or with some of the bigger financial companies around these issues of adherence, how to work more effectively with clients during these excitable times in their lives. How to help prevent regrettable decisions. I do a lot of case consultation with some of the trickier families or trickier cases.
Michael: Just, you know, the really weird, sticky personal client situations.
Moira: Yeah, you know, the ones that kind of keep the advisors up at night. So you talk about talking clients off the ledge and I talk a lot about, you know, talking advisors off the ledge.
Michael: My client who’s spending down. I know that’s it’s going to go badly and I’m concerned I’m going to get sued by them or their family when they run out of money. What do I do?
Moira: Sure. And, I mean, just regardless of a sense of culpability or danger that comes out of that, there’s also just heartache for advisors who really do…you know, who care about their clients and who don’t want to be officiating over the sinking of the Titanic. So, that’s a lot of the work that I do now is training within firms or speaking at conferences and training groups of advisors on how to get better at this stuff.
Where To Start With Learning To Improve Client Adherence [1:31:02]
Michael: So, for advisors who are listening to this and maybe, like, I don’t know, want to try something besides, you know, get a copy of Moira’s book and read it, it will open your eyes on some ideas, like, where would you tell an advisor to start in trying to do something different to implement this stuff?
Moira: You know, years ago it would have been you were just kind of making this up as you go along, but now there have been some training…some institutions out there or institutes rather that really specialize in the personal side of things and provide evidence-based and competency-based training where they’re actually doing assessments of people. You know, my favorite, and in part, it’s because I teach there regularly, is the Sudden Money Institute with Susan Bradley and her new program, the Certified Financial Transitionist Institute. So there are some good training programs out there. Carl Richard’s the Real Financial Advisor that digs deep into some of this. The Money Quotient people, the Kinder people. Brad Klontz’s program. These are all programs that are really credible. It’s not just hype. They are bringing evidence-based teachings into the personal side of things. So it’s not just kind of this airy-fairy stuff anymore. There’s actual techniques and processes that you can learn to get better at the personal side of things.
Another thing that I suggest is that, you know, you gather regularly with people who go deeper into these things. So the FPA Retreat might be an example of a kind of conference where the personal side probably outweighs the technical side in terms of the number of presentations being offered. There are collaboratives like John Warnick’s Purposeful Planning Institute that brings together this incredible multidisciplinary group of estate attorneys and charitable foundations and family practices and accountants and advisors and psychologists and ministers even. The Nazrudin Project. All of these are places where people come to really stretch their sense of how to have discussions about money and what money means in people’s lives.
Your own columns, Michael, one day of the week is very technical and one day of the week is very practice-oriented, and Fridays they always have this delightful mix of everything, including how to have better conversations with people. And so your…you know, the Nerd’s Eye View is just this tremendous resource that I myself turn to on a daily basis to just kind of mine for gems about what is happening in the industry and what might I personally do to just get that little bit better. You know, the longer you’ve been in any field, the more you’re talking about tweaking something minor to achieve…in order to be able to get to the next level of success. It’s not something that’s going to give you a 50% better outcome, it’s something that’s going to give you a 2% or a 3% level of finesse better than what you were before. Is that what you were looking for?
Michael: Yeah. I think just the resources and training that are emerging around this are fascinating to me.
Moira: Do you have some favorites?
Michael: Really, a lot of what you listed. You know, programs like Susan Bradley’s Sudden Money Institute. You know, the tools that are just formalizing better training around how to have some of these, I kind of broadly call them life planning conversations. So material like Money Quotient and some of what George Kinder has done as well.
You know, I’m still struck, I mean, even for some of those programs, there’s just a… I don’t know, there was an interesting granularity that came to me from your book around just some of the surprisingly simple changes you can make that completely alter the trajectory of the conversations you have with clients, starting with things like, you know, just, “What brings you to this meeting today? What do we need to cover in this meeting in order to make it meaningful for you?” And just asking that and asking that every time and seeing what people answer is powerful and can completely change the trajectory of a meeting from what you thought it was going to be, but usually in the direction that the client wants because that’s literally the thing that was on their mind, that they said they wanted to resolve that day. And it may not have been the meeting you expected it was going to be, but it often turns out to be the meeting that the client was really happy with.
Moira: You know, in medicine, there’s the often quoted dictum to first do no harm. And I find myself reminded of that and quoting that sometimes with financial advisors who are frustrated. And they’re frustrated for very compelling reasons about serially non-adherent clients. But I remind them that, you know, first, do no harm. Don’t let your frustration turn into derision or contempt. Don’t be too quick to fire. Understand that people have complex lives and that most people are doing the best they can in a moment. And that if you can convey a level of helpfulness and acceptance to meet people where they are at the moment, you have no idea what kind of benefits that they may reap from that. And that may come back to you in the long run. You know, I joked about getting another jewel in your crown, but sometimes those people come back to you.
I remember when I didn’t have two nickels to rub together in graduate school, I went to see my very first round of financial advisors because of an incident that I detailed in the book about a professor at the medical school who went absolutely nuts on stage after he found out he couldn’t retire. And he just burst into our lecture and talked to the entire hall of medical students about how they needed to take their financial life seriously and they needed to get financial advice. So like the obedient little rat that I was, I strayed off to talk to financial advisors, and only one of the three that I contacted, you know, had the nerve to say, “Honey, you can’t afford to work with me, but here’s what you need to do.”
And, you know, a few years later, I walked back into the office having done what she told me to do and she said, in absolute astonishment, “Nobody’s ever come back before.” And we laughed about it, you know. But she was just my favorite advisor ever, and I was so sad when she retired. But she did such a service to me. And I think nobody had ever come back to her before because, you know, she’d given this advice to people who were in a very transient phase in their life and they moved off to other provinces or states. But, you know, she did every one of them a service by counseling, by telling them what they needed to do to get launched in their financial lives at a time when they were still eating bologna sandwiches four times a week. And so, I just want to encourage advisors that you never know how your words or your advice is going to land on people. And so, just first do no harm, and secondly, trust in the value of what you have to offer.
What Advisors Could Learn From Tracking How Consistently Clients Implement Advice [1:39:11]
Michael: I think we all are struggling a little with that these days, of just trust in the value we offer and the idea that even if clients aren’t implementing right away, it doesn’t necessarily mean it’s bad advice or that they don’t value our advice, but it might mean that maybe there’s some different techniques you can try or conversations you can have to try to figure out, how do you break through to the point that they actually do implement the advice? Because clearly just giving it to them over and over again and telling them what to do isn’t creating the breakthrough you’re looking for. I am fascinated by the idea that maybe someday this would even become a thing that we measure and track. Like, what would it look like if advisory firms tracked adherence and follow-through and someone could actually say like, you know, “80 % of our clients follow through on our advice in the first 3 months and implement successfully?” I’m not even sure we want to measure it right now because I don’t think we want to know what the answer is.
Moira: Oh, but imagine, and they’d be a chicken in every pot.
Moira: I mean, those are the kind of data that I’m just itching to get my hands on. Nobody wants to take them. You know, if you apply for a grant with an agency like the Center for Disease Control or the World Health Organization, you have to show how you’re going to address each of the five areas of non-adherence that I highlight in my book. In other words, if you think you’ve got a great idea for a new intervention, you have to show how you’re going to deal with the predictable and preventable in what is otherwise an inevitable trajectory of non-adherence. Because why would you otherwise throw money at a problem if the practitioner is not going to be willing to address the 100% likelihood that there will be problems in follow-through? And so the work that I keep nudging some of the bigger financial firms that I’m doing is to say, “You know, look, let’s just try and track it, a few of them at least. What is the latency between when you ask for the paperwork and when you get it back? Could we tweak that?”
And so, because there’s just so many ways in which non-adherence shows up, you can take just this, as you indicated, the most granular of the issues and focus on that. And you might want to focus on the things that drive you and your team most crazy or that you know results and the good ones getting away. We already have data that 70% of widows leave the firm within 2 years of the husband’s death.
Now, talk about, you know, big ones that get away. What if we could say internally, even if we’re not publishing it in some sort of research journal, “Hey, we reduce that to 50%, hey, it’s down to 30% now?” I mean, that would be…that kind of success would be phenomenal, but it would be good if we could track whether our efforts are doing harm or doing good. You know, if you can bring sort of the scientific model into…the scientific method into your interventions, you’re going to save wasted time and energy in the long run, just like that credit counseling firm that I mentioned earlier that were about to kind of try and address problems like Christmas or school fees that they really couldn’t address as much as they could sending out encouraging notes about how you’re still on track. So if we could get data on where are the problems actually lying and are our efforts targeted at the right things and are they effective? That would be a dream.
Michael: So where does this go for you from here? Like, what are you working on or focusing on next?
Moira: Right now I am just continuing to try and understand the particular needs of financial advisors. What’s coming out as I ask specifically, “Where are the stress points for you?” Certainly, there are things that I can’t begin to address. It’s far outside my area of expertise. But the big ones have to do with a couple of particular areas of client non-adherence. Overspending is one, adult children is another. So I’m really wanting to develop some specific ways of addressing those pain points. And then the other that’s just coming up is the fact that advisors are people too, and how do we continue to look at advisor well-being.
You know, back to the medical school analogy, we’re working to try and prevent physician burnout so that these bright, talented young people don’t get crushed by the training process and that they don’t get…you know, they don’t find themselves four or five years into their medical practices wishing that they had opened the bookstore or the flower shop. So advisor well-being is a growing area of interest for me. And how do we boost that? And how do we make those things be efficient and effective? And not only evidence-based but really easy to implement. Because all of the things that get in the way of clients implementing financial advice or physical advice are the very same things that get in the way of us doing the right things in our lives.
Michael: So, as we wrap up, this is a podcast around success, and one the most interesting things is to recognize that just even the word success means different things for different people. And, you know, we pursue our paths for different reasons and different motivators. So I’m curious for you just as you’ve gone down this road and you’re doing all of this work in a relatively new space, like, what are you working towards? How do you define success for yourself?
Moira: Well, you know, some of it is tied to the success of the people that I’m working with, so when I see that really wonderful advice is not going wasted. When I see that it’s making a difference. That’s just wonderful. Another measure of success I guess is how much do I get to engage in the things that bring me joy? And okay, from one nerd to another, Michael, without a doubt, learning is just such a joyful endeavor for me. And so the fact that I get to immerse myself in research literature that I find just fascinating, and then really engage in this knowledge translation piece of, “How do I make research results actionable for people who would rather have a root canal than read an economics journal or a medical journal?” That to me is just joyful, joyful work to do. That knowledge translation and to be allowed continuous learning and to work with really interesting and smart people as they carry out their work in whatever field it happens to be.
Michael: Well, very cool. I hope our discussion today at least get some of that work and ideas out to a wider audience of advisors. I love your framing of, you know, you’re doing knowledge translation of how you take all this research literature and then reconfigure it and translate into things that are useful and valuable. You know, I thought you did a fantastic job with that with the book, which was part of how I became familiar with your work and why I was excited to have you on the podcast here today. So thank you for joining us, Moira, and sharing all of this.
Moira: Well, thank you for the work that you do because you do much of the same thing, Michael, particularly in the summaries you do of other people’s research and books. Those are wonderful precis that show up in my mailbox every Friday afternoon. And I love them.
Michael: Well, my pleasure. Thank you. And thank you for joining us on the “Financial Advisor Success” podcast.
Moira: You bet.