Although we may focus on various steps we can take to get a better return on our investments or a lower cost for our debt, in reality the most foundational base for financial success is having good financial habits.
Yet in practice - as we've all witnessed with clients - not everyone has already learned and embraced good financial habits, and even worse, it can be extremely difficult to change bad financial habits. On the other hand, the weight loss field is in a very similar position; just as the key to financial success is to save more and spend less (than you make), the key to weight loss is to exercise more and eat less.
So if it's once again all about habits, maybe there's something that planners can learn about helping clients with financial habits from weight loss experts who assist with other types of behavior and habit change.
The inspiration for today's blog post comes from some recent conversations I have been having with Karen Miller-Kovach, the Chief Scientific Officer for Weight Watchers, who will be a speaker at the upcoming FPA Retreat conference this May (if you're interested, sign up soon - early bird registration for the conference ends this Friday, March 25th!). At the conference, Karen will be presenting some of the research that she has explored regarding habit formation in the context of weight loss, that can be equally relevant to financial planners trying to engage in our own habit change with clients.
For instance, some of the research indicates that just as clients may have differing communication styles for understanding and learning information, so too do those communication styles translate to different ways to help clients change their behavior. So as opposed to segmenting your clients based on their net worth and finances, Karen suggests that it may also be necessary to segment your clients based on their communication styles, so that you can communicate the right kinds of behavior-change messages that fit the client's way of learning.
Another concept is the behavior change model called motivational interviewing. The basic concept is relatively straightforward. When someone tells us what to do - even if it's the 'expert' - we tend to push back and refuse to do what we're told. On the other hand, when we are coached by an interviewing process to find our own internal motivation to tackle an issue, we are more likely to enact meaningful change. Under the motivational interviewing model, the relationship is not one of direct persuasion by an expert to the recipient of the information, but instead more like a counseling partnership role where the client is directed towards examining their own ambivalence to resolve the behavior change challenge.
So what do you think? Are there clear parallels between the importance of good health habits for weight control and good money habits for financial success? Could financial planners have something to learn about the behavior change and habit formation research going on in other fields? Will you be attending FPA Retreat to join in the conversation?