Advice That Sticks. How to Give Financial Advice That People Will Follow,’ a new book by Moira Somers, poses the right questions about a pesky subject and provides the answers in a brisk, authoritative style that’s leavened with wit.
Somers, a Canadian financial psychologist, executive coach and wealth consultant, works with financial professionals to help them successfully dispense financial advice. She bemoans the lack of training that advisors receive in dealing with a client’s personal life and psychological makeup; understanding these two areas is essential to advising, she says.
“Regrettably, most credentialing programs in the financial professions seem to operate on the assumption that, once the technical stuff is mastered, the so-called ‘soft skills’ will take care of themselves.
“One advisor lamented to me, ‘the only advice I got with respect to ‘soft skills’ was, to have a firm handshake and to use mouthwash,’’’ Somers said.
Most people find it hard to follow advice about money, even from an expert, so advisors need to start by avoiding basic mistakes. Advisors should not:
• Assume that a client is inevitably ready to take action,
• Use insider jargon,
• Ignore how emotions affect a decision, and
• Express disapproval or disdain to a client.
She says each client’s profile should include their financial history and circumstances, what inspires their adherence to advice, their personal characteristics, how the advisor team treats the client, and what social and environmental factors influence client choices.
Every advisor will meet non-compliant clients who are enough “to make Jesus want to drink gin straight out of the cat dish,’’ (quoting writer Anne Lamott). That’s where what Somers called Adherence Boosters come in. Advisors should establish a clear agenda at the outset of each client meeting, and ask questions such as “What would make our time together today the best use of your time, energy and money?’’ and “What are you hoping will happen as a result our meeting?’’
Clients should be asked at the end of the meeting if the objectives were accomplished, and if they are unsure about the meeting’s content. Clients are unlikely to follow through on advice if they do not comprehend the advice, which also means they are unable to give truly informed consent.
“Failure to understand clients’ goals and objectives is one of the top five reasons advisors are fired, second only to failure to communicate on a timely basis.’’