Numerous studies have documented the link between goal attainment and well-being. If goals are achieved, overall well-being increases. The same pattern has even been found within financial goal attainments.
But clients and their advisors may have different goals — for example, the advisor wants the clients to save the bonus, and the clients want to spend the bonus. The advisor thinks paying down the debt is most important, but the client feels that starting a college savings plan is more important.
The advisor wants the client to diversify, and the client wants to buy more and more of their own company stock. The examples are nearly endless, and the answer is not as simple as “the customer is always right” and thus, simply giving in to the client.
In the following example, a communication technique known as nonviolent communication will be employed. In situations where there is a power dynamic as well as competition, this is a very useful style of communication because it addresses these two concerns and at the same time allows for dialogue that can bring about collaboration, ending in goal congruence.
Case study: Facilitating nonviolent communication
Dina Abrams has decided to come in and meet with Laura Bonita, her financial planner, to discuss her portfolio. There has been a fair amount of market turbulence lately, and Dina is feeling very uneasy, even angry and scared about the situation.
Dina remembers the housing crash and does not ever want to feel the way she did then again. Dina wants to put more of her money in cash, and she knows Laura isn’t going to be happy about it. Dina knows and so does Laura that this is going to be a heated conversation.
Laura: Hi, Dina, thank you for coming in. I know it is tough, but I am glad you came in and are willing to sit down and talk with me.
Dina: Honestly, we can talk, but it is not going to change my mind. It is my money. You work for me. I am here, but I want to move to cash.
Laura: I respect your honesty, and I hear your frustration. If you do not mind, I wonder if we can try something different today. This is a tough conversation, and we both know we are on opposite ends of it. If you are willing, I know a communication technique that will help us to talk more openly and honestly, but also I think it will help us to really hear one another and perhaps find a way to collaborate. Tell me, would that be all right with you?
Dina: Sure.
Laura: The first step is observation. We each state what we see happening, while avoiding blame, criticism or exaggeration of any kind. I can go first. From my perspective, when I see you go through market turbulence, to me, you appear scared and end up fighting me over your portfolio. Now it’s your turn. Please tell me what you see or hear or remember, without evaluating it, and how it does or does not contribute to your well-being.
Dina: I do get scared during market turbulence. I do not want to be demanding or angry or fight, but doing nothing, as I am often asked to do by you, does not improve the situation. You have to understand, when I was growing up, I watched my father fall into despair after the technology fund in which he’d invested our family’s life savings became nearly worthless during the dot-com meltdown. He said to me over and over again, Dinny, if only I’d listened to my gut, I would have sold out and put everything back into our bank savings account at the first sign of trouble. At least then, I’d always know how much we had. Always trust your gut, Dinny, don’t let these so-called experts push you around.
Laura: Thank you for trying this, really. It is helpful to hear this. Next step, feelings. In these moments of distress, I feel sad and defensive.
Dina: In these moments of market turbulence, I feel scared and so, so anxious. It sends me straight back to those conversations with my dad when he was so distraught. And it reminds me of his advice. I feel like I have a responsibility to learn from his lesson and rely on my instincts. It reminds me how safe I feel when my money is in my bank savings account.
Laura: Thank you, sharing that you feel anxious and scared really helps me to understand. Now we express needs or values. Dina, I want you to know that I value you as a client, and I value your honesty and willingness to talk today. In regard to the portfolio, I value your trust in me.
Dina: I value that I can talk to you and that you want to hear what I am going through (smiling a bit) … even when I get angry. But I also value what I learned from my dad’s experience and the importance of doing what feels safe for my family.
Laura: I understand. Now request. I would like for you to consider other options today, other than just going to cash. I think I understand what you’re feeling and why, and I would ask you to allow me to explain how what we’re doing with your investments now is so very different from what your father was doing with his technology fund during the dot-com bubble.
Dina: OK, I’m willing to listen. But in the end, I would like to leave this office today with less anxiety.
Laura and Dina were both able to calm down and talk using the structure provided by nonviolent communication. Instead of simply being opposing parties on either side of the table doing their best to compete and use power over the other one, they may have actually shared their needs and made requests in ways that allow for additional brainstorming and collaboration.
For example, Dina said she wanted to leave with less anxiety. Going to cash might give her less anxiety, but it also might give her less anxiety if Laura runs 10 new financial planning projections demonstrating what could happen to the portfolio and how Dina might still be just fine without going to cash.
Essentially, by slowing down and structuring how they would talk to one another over a topic that they knew was a touchy one, they were able to have better communication and perhaps achieve an outcome that fits both of their requests.
Learning better techniques
In practice, goal congruence is more difficult than case studies can illustrate. It is more about compromise than complete agreement. The communication skills and techniques employed take practice.
There are training programs that focus on life planning or developing financial goals in line with clients’ values. You can take training courses that are designed to aid financial planners in developing these skills, such as those provided by the Money Quotient, The Kinder Institute and Advisor Roadmap.
However, as a first step, we urge you to be curious about your clients and learn the “why” behind their financial decision-making. What life experiences have led them to the beliefs and behaviors you encounter, to the values that drive them? Until you can understand the “why” behind those beliefs and behaviors, you’ll struggle to deliver advice that your clients will actually act on.
Copyright © 2022 Certified Financial Planner Board of Standards, Inc. This article is an excerpt from the chapter “Identifying and Responding to Client Values and Goals,” in the book “The Psychology of Financial Planning.”
Meghaan Lurtz, Ph.D., FBS, is a professor at Kansas State University, where she teaches courses for the Advanced Financial Planning Certificate Program. She also teaches financial psychology at Columbia University and is an adjunct professor at the University of Maryland. Megan McCoy, Ph.D., LMFT, AFC, 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.
