Financial planners are regularly faced with clients who are experiencing both economic and personal crises. It is not uncommon for clients to bring up difficult issues related to grief, divorce, family conflict, addiction, mental health and a host of other nonfinancial issues with their financial planners.
Often, the crises in our lives have a direct impact on our financial well-being and precipitate changes to our financial plans. As a result, financial planners are likely to be the first call a client makes after a big life decision or event.
Clients dealing with personal and financial crises often experience physiological arousal. Physiological arousal is our evolutionary adaptive response to stressors. Clients may not show up at your appointments or stop returning your calls. Clients may avoid responsibility or blame you or others for the crisis.
The very best reaction to physiological arousal is to “roll with it” and put the planned agenda aside to address the client’s current emotional climate and thought process. Ask the client what is the most important thing on their mind at that moment. Resting in silence can feel awkward, but it is a useful approach — recognizing that clients are unlikely to say what is occupying space in their mind right away.
Think of the financial planner’s role as the first responder. In crisis moments, clients turn to existing relationships for answers. The financial planner should respond to client crises by assessing the situation, identifying the most significant concerns, slowing potential long-term damage and getting advanced assistance.
Case study: Emotions in client meetings
Let’s assume that emotions always show up in client meetings. Whether emotions are addressed or not, they are there. Consider this scenario between a financial planner, Evers, and his client, Monica, and note possible emotions the client could be experiencing.
Evers: Great to see you today, Monica. Thanks for coming in. Can I get you anything before we start?
Monica: No thanks, it was really hard for me to come in today. Let’s just get it done.
Evers: OK, let’s take a moment before we get started to check in. I am noticing you seem distressed. Do you want to talk about it?
Monica: No, there is nothing you can do. My life is exploding, and I have to get this plan finished before everything falls apart. I think you said we were focusing on retirement planning today. I really forgot, where do we start?
Evers: Yes, your memory is correct, that was our plan. I am wondering if there is something more pressing for us to explore today. What is going on?
Monica: My sister was in a car accident, and it is likely that she won’t make it. I can’t remember if I told you, but three years ago she asked me to take her children if she couldn’t care for them and it looks like that may become a reality. When she asked, I agreed, but I am not really sure I took it seriously. My kids are grown, and my financial situation is set for my family. Now I think all of my plans will be derailed, but I’m the only one my sister has.
(Planner note: A planner may be tempted to go straight to problem-solving or looking at the numbers. Consider all the implications for Monica. What should be Evers’ next steps?)
Evers: I can only imagine how difficult this must be for you and your family. Should we take a moment to see how to best use our time together today?
Monica: OK. I just don’t even know where to start …
Evers: Well, there is no “right answer,” so let’s take a breath and talk through what might help bring you some ease in this situation. Making decisions can be more challenging when we are in crisis, so let’s focus on the concerns, then we can brainstorm some ideas. Often the personal or emotional aspects are more challenging than the dollars and cents. We will look at both, but let’s begin with the concern that can help you feel most grounded.
Monica: (taking a deep breath) OK …
As shown in this case study, Evers demonstrated empathy and compassion for Monica by perceiving her physiological arousal, asking simple direct questions, validating the reality and importance of her feelings, patiently allowing her time to respond, listening and being flexible with the meeting agenda.
Case study: Unexpected turns during a client meeting
Despite a financial planner’s preparation, meetings have a way of taking unexpected turns. Viktor Inman was in his first year as a financial planner, and it was important to him to be well prepared for initial client prospect meetings. In his initial call with Jim and Rosalie Colombo, Viktor knew they wanted to talk about being prepared for their pending retirement.
Viktor prepared a detailed agenda and checklist to make sure he covered the topics typically important to prospective clients in their late 60s and nearing retirement. Viktor gathered information related to a variety of retirement investment solutions, in case the conversation headed in that direction. Viktor welcomed Jim and Rosalie into the conference room.
Viktor: It’s nice to meet you, Jim and Rosalie. I am excited to talk to you about your retirement plans. What would you like to accomplish as a result of meeting today?
Jim: I have stage 4 esophageal cancer. I have three to six months left, and I want to make sure Rosalie will be OK in retirement.
Rosalie began crying, and Jim grabbed her hand to console her. Viktor immediately knew this would not be a typical initial client meeting, and he decided not to follow the agenda he had prepared. While Rosalie was emotional, Jim remained calm and resolute.
Viktor takes a moment to acknowledge his increased anxiety. He had not been prepared to discuss imminent death during the first client meeting. And he was not prepared to talk about an issue (e.g., cancer) that was deeply personal to him. Viktor took a deep breath and continued.
Viktor: Jim and Rosalie, I am so sorry to hear this. This must be extremely difficult. I hope I can help you be prepared and bring you peace of mind. Jim and Rosalie, describe for me what Rosalie being “OK in retirement” means to each of you.
Jim spent the next hour talking about family, friends and plans Jim and Rosalie had talked about for their planned retirement together. Rosalie talked about the trips they had planned, as well as the volunteer work she does at their church.
Viktor decided to use this initial meeting to listen, understand and take notes on what was important to the Colombos. He knew that this was not the appropriate time to talk about 401(k)s, IRAs or life insurance. By taking a moment to pause and sit in silence, Viktor was able to gather his thoughts and stay focused on the clients.
Viktor suggested that Jim and Rosalie schedule a follow-up meeting to talk in greater detail about investment and insurance specifics. Jim and Rosalie agreed to meet again in a few days.
Address concerns before making a plan
In both case studies, the element of silence was important in responding to crisis. Once the client and planner are refocused and ready to address the client’s concern, more logical planning will follow. Getting out of a heightened physiological state allows the client and planner to better explore available resources and needs.
Once the client agrees on the course of action to take, the planner can bring focus to the client’s existing resources (financial/capital, personal, social/community) to develop and/or revise the plan.
Copyright © 2022 Certified Financial Planner Board of Standards, Inc. This article is an excerpt from the chapter “Navigating Change,” in the book “The Psychology of Financial Planning.”
Saundra D. Davis, MSFP, APFC, FBS, CSC, is founder of the Financial Fitness Coach (FFC) certification program, which helps individuals, families and communities think and talk differently about money. She is also the founder of Sage Financial Solutions, which develops financial capability programs for low- and moderate-income communities.
Sonya Lutter, Ph.D., CFP®, LMFT, is the director of financial health and wellness at Texas Tech University. She remains active with ENLITE, a company she built to bridge the gap between financial planning and mental health.
Megan McCoy, Ph.D., AFC, LMFT, CFT-I, is a faculty member at Kansas State University, volunteers on the Financial Therapy Association’s Board of Directors and is the associate editor of Financial Planning Review. Dr. McCoy’s research focuses on financial therapy and financial self-efficacy, as well as diversity, equity and inclusion within financial planning.
Lance Palmer, Ph.D., CFP® is professor of financial planning at the University of Georgia. He has provided in-depth experiential learning to more than 900 students and overseen more than 40,000 hours of client-facing service learning. His research explores motivating financial behavior change through brief intervention strategies.
