The best help an advisor can provide for most clients is to let them reach their own financial decisions, according to Jeremy Keil, founder of Keil Financial Partners, a retirement focused financial planning firm based in Milwaukee.
Keil, who has 20 years of experience in the financial industry, also is the host of a podcast, "Retirement Revealed."
Keil, for the most part, does not tell clients how to solve their financial problems or plan for their futures. Instead, he walks them through a process called "motivational interviewing" that enables them to reach their own conclusions, which then makes them better able to stick to their plans, he said.
He used the framework to help a retired couple in their 60s, who came to him when they were struggling with whether they should give money to their 35-year-old son who had needed financial assistance in the past. The couple, who were retired from middle management at local manufacturing companies, could well afford to provide money to the son. They had a combined retirement income from Social Security, pensions and investments of $100,000, and enough savings so they were not likely to run out of money for themselves.
“Although they had the wherewithal to provide the needed assistance, the couple was afraid they were establishing a dangerous pattern by repeatedly bailing their son out. But at the same time they did not want the son to lose his home or fall deeper in debt or have to declare bankruptcy. They also were unsure how to be fair to their daughter, who is a couple of years younger and more financially responsible,” Keil said. “Luckily, I was taking courses in motivational interviewing and the technique was perfect for this couple.”
Motivational Interviewing, which is taught through a combination of online and in-person courses, is designed as a collaborative, goal-oriented style of communication with clients that aims at changing behavior. “It strengthens the personal commitment to a specific goal by exploring the person’s own reasons for change,” according to its website. The framework was developed decades ago to help counselors assist those with drug and alcohol addictions, Keil said.
“It is a cross between good listening and effective guidance that is designed to empower people to change their lives by drawing out their own goals and desires by asking open ended questions. Motivational Interviewing requires the advisor or counselor to engage with the client as an equal partner and refrain from giving unsolicited advice,” he said.
In the situation facing the client couple, Keil did not want to give them the "financial math" answer.
“The clients and I talked through their feelings on both sides of the issue, making sure they had explored all of the options,” Keil said. “As we talked during our meeting, they came up with their own answer.”
Keil explored with the clients how the situation had developed with their son; what had happened the last time they gave him financial help; and what they thought might happen this time.
The couple and their son’s family all wanted the son’s children to remain in their church’s private school, which was an extra expense. They decided they would pay for the elementary school tuition that was coming due for their grandkids, but they wouldn’t help pay down the son’s credit card and other debts.
That way, the son and grandchildren received something of value they wanted and at the same time reduced the expenses for the son’s family. They also put an equivalent amount of about $5,000 in a 529 plan to go towards the daughter’s graduate school bills. The couple took the money for their soon from cash and they continue to fund the 529 plan from cash, Keil said.
Through the motivational interviewing framework, Keil had learned that education was an important priority for the couple.
“Sometimes people make financial decisions based on who they talked to last and then they regret the decisions,” Keil said. “With motivational interviewing, it is a process – the clients make their own decisions and they are more likely to stick with them.
“These are not decisions you are telling clients to make. In this case, I didn’t run the numbers and tell them they could easily afford to help both children. Their decision resulted from me knowing how to ask questions and guide the clients towards solutions they came up with and that they thought were best,” Keil said. “They felt a lot of relief and calm after making this decision and a large part of that comfort came from how much they participated in the problem solving.
“It’s been about four years since this conversation and the gift the couple made. So far the son has not gone back into the financial hole he had dug himself into before. The couple remains comfortable with their decisions, not just because of the good outcome, but because I had not dictated the plan,” Keil said.