Eat That Frog!!
For those that aren't familiar with the book of the above title, I will summarise. We, as humans have a tendency to procrastinate, we put off decisions in the hope that they will either go away or someone else will make the decision for us.
The book uses an analogy for this. You are given a frog and you have to eat it. You are given a deadline of midnight and so you have to make a choice.
Do you eat the frog now? In an hours’ time? Or at 1 minute to midnight?
A good example of this was the chaos caused by people rushing to register to vote in the recent EU referendum. This last minute rush crashed the system!
Most people were aware of the deadline but put off making the decision to register until the last minute.
As advisers we are often faced with clients who are likely to know that they should be doing something about their financial future but don’t do it.
There are some clients we see that clearly need our help, but are not sufficiently motivated to progress to the next stage. So how can we help them to take that step from thinking they need to do something, to actually doing something?
This dilemma is visible across many facets of life, we all know we should eat less and exercise more but some of us decide not to do this. The motivation for change is not strong enough to make us change our behaviour.
We are often in denial; we think we are immortal or convince ourselves that we will start that new exercise regime / diet etc. etc. next week!
To highlight this point, let’s use an extreme example of somebody who has issues with alcohol abuse. There are stages that this person would need to go through before they would be in a position to make a change. This has to start with an acceptance that they have an issue. The next step is to want to do something about it and
They may then attend AA or seek help from their doctor, however until they are really motivated to change and accept that they need to, no amount of ‘advice’ is going to help them.
This is obviously an extreme example but most people are in denial about how their desired retirement lifestyles are going to be funded, how their mortgages would be repaid if they were to die or be unable to work and so the same can be said about these people as in the example above.
There is a psychological method known as ‘Motivational Interviewing’ that is often used to help those with alcohol and substance abuse issues that I think we can learn from to assist us in engaging those clients that have sought advice, but need some extra help to become motivated to change.
There are four stages; the first stage is denial, second is an acceptance that change is required, third is motivation to change and lastly there is the will power needed to maintain that change.
Our marketing efforts can help to bring people round from denial to an acceptance that something needs to change, that is what is likely to get them through the door in the first place.
It is then the challenge of moving them on to the point that they feel truly motivated to do something about their financial circumstances and importantly maintaining this motivation and discipline that we have to overcome when they are sat in front of us.
The brainy people behind ‘Motivational Interviewing’ state that it is the client's job to resolve their own ambivalence. It is therefore our job to help them to do that and we can do so by using a combination of good coaching skills, effective listening and engaging financial forecasting / planning.
It also suggests that direct persuasion is not an effective method for resolving ambivalence.
In other words, knowledge alone is usually not sufficient to motivate change within a person. They must want to. Now the fact that they are in our office is obviously a good sign but that does not mean that they will automatically sign the fee agreement and take our advice.
Ultimately, as advisers we must recognize that our role should be based on collaboration and coaching rather than confrontation and authority, of exploration instead of explanation.
Our role is to make the frog appetizing!
There is a reluctance for people to seek advice based on a fear that we will become a ‘brake’ on their behaviour.
They are worried that if they seek financial advice, we will all tell them to stop enjoying themselves now, eat beans on toast every day and forget the annual holiday so that they can stick their hard earned cash into a pension that they might be able to get their hands on at some point in the future, all of this against a backdrop of negativity dished out by the national media outlets.
If this is the case, we are hardly going to break that paradigm if we spend our time with clients focussing on explaining the ins and outs of pension legislation, tax relief, alpha, fund performance or the virtues of passive versus active investment management.
However, if we focus on exploring with the client what is important to them about a successful retirement or whatever their own goals may be, we shift the focus onto something that is far more likely to result in an engaged and motivated client.
Using financial forecasting to highlight to clients the potential impact of their change in behaviour, allows them to contextualise their options. We are also able to highlight the impact of delaying action and not taking action. Again this is more likely to result in motivation to change versus a bland report full of jargon and technical guff.
The motivation is far more effective if it is a conclusion that the client themselves have reached, with our assistance, rather than simply being told ‘save into a pension because you get some tax relief and some tax free growth’ and all the other boring stuff we can spout!
The outcome may be the same but the motivation from the client will be higher and they are also far more likely to remain engaged with their own financial plan than if they leave feeling ‘sold to’.
Engage the client, help them to focus on what is really important to them and make them feel confident about the changes required whilst not becoming a brake on their behaviour.