When faced with difficult decisions, we may feel overwhelmed and avoid taking action. This is evidenced time and again in the legal and financial arenas. Think about it. How many intelligent people do you know who do not have their will or other legal documents in order? Or perhaps you have worked with clients who have agreed to a retirement income strategy, but never executed the plan as intended. This avoidance behavior is not only frustrating to advisors, but also perilous to clients.

Fortunately, as an advisor you have the potential to play a powerful role in guiding your clients to make tough choices and initiate steps that ensure their family's financial futures. The key to embracing the role effectively is to identify the critical factors required to influence behavior and develop a strategy for interacting with clients.

The Problem
A significant aspect in your role as an advisor is to provide solutions to help your clients achieve their financial goals. The need for clients to make certain decisions and take action may seem obvious to you, as you objectively assess your client's situation. However, everyone has a different history and perspective that affects their willingness to act. The key to distinguishing yourself as an advisor and becoming a go-to figure in your client's life is to connect with him or her on a personal level and learn about the significant issues in his or her life. This knowledge will not only allow you to predict how likely they are to comply with your requests, but can also provide insight into the best strategy for effectively working with them.

The Solution
The first step in influencing your client's behavior is to identify his or her motivation, along with any obstacles that may interfere with engaging in the new, desired behavior. Psychological research on this topic has recognized eight key factors that have been shown to affect behavior. To help you predict your potential sway on your client's financial behavior, ask yourself how you believe he or she would rate in these areas?

  1. Intention. Does your client recognize the necessity to act on his or her behalf? To be willing to move forward, the client must understand the purpose. In using retirement income planning as an example, the most critical aspect is helping your clients comprehend why they need to plan for their future.
  2. Environmental Constraints and Restrictions to Taking Action. What are the external factors interfering with your client's willingness? Are there actual physical factors inhibiting his or her cooperation? The causes could be the inability to get to your office, a language barrier, lack of available funds to make the contribution or any other realistic circumstances that must be taken into account.
  3. Skills. Does your client have the requisite knowledge needed to successfully complete the necessary steps? Make no assumptions about your client's financial acumen, regardless of career or how sophisticated he or she may appear. When giving instructions, be sure to review and confirm the client's understanding of the tasks at hand.
  4. Attitudes. What are your client's beliefs about taking required actions? What are your client's fears and concerns that interfere with a commitment to the desired results? Once your client understands the importance of taking financial action and acknowledges he or she must prepare for the future, you have to determine what aspects might interfere with completion of tasks. For example, is he or she in denial about the inevitable or reluctant to be financially responsible, which results in avoidance?
  5. Social Norms. Perceived social pressure to perform a behavior could be whether there is an expectation in their social network to engage in the right steps. Do not underestimate the power of group behavior. If there is a social norm among their peers to take part in retirement income planning, there is a greater likelihood they will do it.
  6. Self Standards. Is performing the behavior consistent with the client's self- image? Does your client have a personal commitment to engage in the needed behavior? For example, if no one in your client's family lived long enough or if family members did not possess the financial means to retire, your client may have no frame of reference about the reason to create a retirement income plan, for example, or open an annuity.
  7. Emotions. Emotional reaction to performing the behavior could explain why your client is either reluctant or comfortable taking action. There are different emotional styles and approaches to the future. Does your client take a structured approach to life or is he or she more free-spirited? There are also different cultures that stress priorities distinct from those of the majority, so it's important to understand such nuances in your clients' lives that have the power to positively influence behavior.
  8. Self-Efficacy. The client's perception of his ability to perform the behavior could affect whether he has the confidence to successfully engage in the job at hand. Having the skills needed to engage in a behavior is just as important as possessing the self-esteem to be able to initiate and maintain the required behaviors. It is important that you break down complex tasks into small, doable steps.

The Plan
To effectively influence your clients, you have to be clear about what specific behavior you need from them in order to develop a strategic plan to get them to follow your requests. Utilizing the concepts presented you should have the tools necessary to assess your client's willingness to comply and to create an appropriate behavioral plan to achieve the agreed-upon goals.

Take a moment to summarize your assessment of the reluctant client you previously identified. Consider devising a plan to influence him or her to follow through with some necessary financial behaviors, such as signing required documents, reading product materials, gathering ancillary financial information and meeting with you.

Be sure to incorporate essential behavioral principles, like clearly defining your expectations, breaking down complex behaviors into understandable steps, setting realistic target dates for completion of necessary tasks and reevaluating the plan if it isn't working. Remember that failing to use your skill in influencing your clients' financial behavior is a missed opportunity to create true value in your clients' lives. ows


Dr. Denise Federer is a clinical psychologist, executive coach and founder of
Federer Performance Management Group. She has been a consultant
to the financial industry for 25 years