Providing great advice means understanding human behaviour.
“Who here has ever felt like your client’s therapist or counsellor?” asked Brian Portnoy, founder of Chicago-based Shaping Wealth, a learning platform for wealth professionals.
Portnoy spoke on Friday in Gatineau, Que., at the Institute of Advanced Financial Planners’ annual symposium.
“You’re a technical expert in insurance, investments, estates [and] taxes,” he said. “But you’re also a guide for helping other human beings navigate uncertainty and change.”
He outlined five ways advisors can better guide their clients, based on an understanding of human behaviour.
Communicate deliberately. Clients are more likely to remember the first and last things you tell them, Portnoy said, so don’t put important messages in the middle of meetings.
Include emotions in the planning process. “Emotion precedes decision,” Portnoy said. “We’re feeling that emotion before that cognitive activity takes place.” He suggested that advisors and clients alike practise identifying their nuanced emotions, beyond broad descriptions such as “sad” or “fearful.” That kind of self-awareness of both the advisor and client can improve emotional intelligence and service quality, he said.
Introduce rigour to the financial decision-making process. For example, a pre-mortem exercise, in which the advisor imagines possible failures and works backward to assess which actions would have led to those failures, can minimize risk.
Automate decisions. It takes about two months to build a new habit, Portnoy said, and once created, a habit is difficult to break. Help your client create good financial habits and reduce cognitive load by, for example, automating a monthly savings deposit.
Talk about meaning. It’s up to advisors to help clients achieve financial well-being, Portnoy said, which includes underwriting a meaningful life. He suggested advisors ask clients what would make them love their life, and then work out how to fund such a life.
Investment Executive was a media sponsor of the IAFP symposium. No coverage was guaranteed in exchange for the sponsorship.