Practice Management
Consider clients’ money mindset so your advice sticks

RIAs bring a vast knowledge of investments and how to use them to help clients pursue their financial goals. But just as important to the effort is knowing how a client relates to money and understanding their history using it. After all, all the great advice in the world does nothing if it’s ignored. Read more to learn about why it’s important to uncover a client’s “money mindset.”

In the book “The Psychology of Money,” author Morgan Housel writes: “We think and are taught about money in ways that are too much like physics (with rules and laws) and not enough like psychology (with emotions and nuance).” That can be especially true with advisors who might regard financial planning as a math-based endeavor: applying formulas to data to achieve the highest return.

But, often, a client’s success in achieving financial goals is more dependent on how an advisor can influence their behavior by using softer — less quantifiable — skills. 

Unpacking the emotional baggage

“I use my social work and teaching degrees so much more than I do my CFP,” says Kelly Hokanson, owner and certified financial planner at RIA firm The Planned Approach in Kansas City, Missouri. “If a client’s behavior doesn’t support what we’re doing, investment performance doesn’t matter.”

Understanding your clients’ emotional triggers is key to being able to help them achieve financial goals. Stocks, bonds and other investments are only successful if that financial plan aligns with a client’s motivations and fears. These client conversations often become emotional, Hokanson says.

“It’s more about, ‘What’s going to happen to my people after I die?’” she says. “I have had clients literally in tears at that meeting.”

Over the years, these conversations have led to her developing client profiles, a shorthand for a client’s financial history. For example, she says her “Bag Lady” clients are women who are “really good savers, but never feel like they have enough.” Money, for them, is security. Another group is the “Emotional Spenders,” who make purchases to fill an emotional need.

Hokanson says advisors should be willing to spend enough time with clients to uncover these deeply personal experiences. “As an advisor, you have to go into the why,” she says. “It turns out that as a young adult, one of my clients broke up with her boyfriend, was upset and told her mother about it. Her mother said, ‘Daddy’s credit card is in the top drawer of the desk. Take yourself shopping.’”

Knowing that helped Hokanson understand how the client copes with stress and how that might mitigate any financial plans the two may come up with. “If I know where you’re coming from, I can remind you: You told me your goal is to XYZ,” she adds.

Building ties that last

“A client’s ‘money mindset’ plays a huge role,” says Koko Archibong, vice president and private wealth advisor with Capital Group Private Client Services. “I’m always trying to understand what is affecting their decision-making so I can deliver my message in the way that it is best received.”

For example, the axiom “don’t put all your eggs in one basket” might be more difficult for a client whose wealth comes from one particular company’s stock. “He understands the need for diversification, but he perhaps has an unconscious attachment to this investment,” Archibong says. “To get him to a more diversified position is going to take time and checking in to see how he feels.”

Archibong also says he understands how advisors’ own personal experiences can help the advice they give to better connect with a client. Individuals such as athletes or entrepreneurs, who may accumulate wealth in rapid fashion, may not have peers they can ask about wealth management.

Archibong works with athletes with whom he’s able to build a rapport, in part, because of his own background as a former player in the National Basketball Association and a member of the 2012 Nigerian Olympic basketball team. “I get it from my own lived experience,” he says. “I know what my 20-year-old self needed to hear.”

Often, clients like these young athletes are the “first-in-their-families” to earn wealth early in life. Their situations can be even more complex as they try to juggle their own financial well-being as well as that of family they feel obligated to support.

Mind on my money and my money on my mind

Archibong takes on a coaching role particularly with young athlete clients to help them be as comfortable with managing their money as they are on the court. “I remind them that they didn’t get to the NBA by accident,” he says, referring to the dedication it took to become an elite athlete. “They can harness those same skill sets for success in financial matters.”

Before Hokanson became an RIA, she was a social worker, and says she was at first surprised at how much she leaned on that training when she started her RIA practice. “But then you realize, money is just so emotional for every human on the planet,” she says.

Once advisors understand what motivates (or could sabotage) clients, getting them to follow financial planning regimens is similar to building habits that support healthy living. “Everybody knows they’re supposed to eat their vegetables,” Hokanson says. “But if we can help them make their salad on Sundays for the upcoming week, it’s a lot easier to follow through.”


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