Kitces: Flaky clients? Make planning advice stick

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The ideal client only exists on paper. In the real world, most clients are complex, requiring a long series of recommendations implemented over time. Even the most diligent clients, however, may not necessarily follow through on everything. And as other demands and distractions sap their focus and motivation, it can become far more difficult over time to finish all the implementation steps.

Though it may be comforting to put the onus on the client, the advice-giver has a fundamental role to play, and a shared responsibility to ensure that the advice they offer actually sticks.

The famous 80/20 rule contends that 80% of the profits come from the top 20% of a firm’s clients. It’s common for advisory firms to have a mixture of so-called good clients, who have the wherewithal to compensate the advisor for their time and services, and a number of so-called bad clients, who aren’t necessarily profitable for the firm but who are nevertheless being served.

Another way to look at this is simply to realize that some clients are good because they’re easy and pleasant to work with, while others are bad because they don’t adhere to their meetings, follow through on their recommendations or take their advisor’s advice — despite ongoing meetings to remind them of what they’re supposed to do.

Some advisors won’t even take on, or will outright fire clients who don’t adhere to their advice. Somers suggests that this may be a wrong-headed approach.

All of this is to say the challenge of advice adherence isn’t new. The phenomenon has been well researched in the medical industry, where doctors may dispense advice and recommendations for healthy eating and exercise regimens, or prescription drug and physical therapy courses, which patients may or may not follow through on. Some researchers have suggested that non-compliant patient behavior may actually be one of the most common causes of treatment failure for chronic health conditions.

In “Advice That Sticks,” Dr. Moira Somers explores how we can leverage the research on non-adherence in the medical realm to break through with our clients. Indeed, there is tremendous value to be created by not just giving good advice, but by being among the best at giving advice in a way that sticks.

And what the medical profession has learned over several decades is that a patient’s non-compliance with their doctor’s recommendations can sometimes be as much a problem with the doctor giving the advice as the patient failing to take it. In other words, there really is such a thing as good advice badly given.

One of the reasons that patients fail to comply with the advice of their doctors is that the very nature of the doctor-patient relationship implies a power differential that can make patients feel uncomfortably judged. Through this lens, non-compliance may be viewed as an act of defiance. This goes far to explain why researchers now frame this response as the less loaded non-adherence rather than non-compliance.

The fundamental point is that the advice-giver has a role in the process, and it’s not limited to merely dispensing the technically accurate and correct advice. Rather, it’s to deliver the advice in such a way that it increases the likelihood that the client will take it on and stick with it.

While the essence of advice-seeking behavior is to get help solving a problem, it’s not always just about finding an answer, Somers posits. After all, if the answer is just a piece of factual information, we can simply ask Uncle Google, Aunt Siri or Aunt Alexa.

And not only do consumers have ever-growing access to more information directly, seeking out and getting advice still has a material cost as well. This means that a client must be in some non-trivial amount of unsettled discomfort to be willing to go through the trouble of finding, hiring and paying for — and then hopefully taking advice from — an advisor.

The significance of this cost barrier and the mental motivators it takes to overcome it is that, as Somers points out, there’s an inherently emotional component to the advice-seeking process that drives the answer to the questions, “Why is it so important to get this answer to this problem?” and, even more significantly, “Why seek out this advice now?”

Somers identifies no fewer than 10 different reasons that clients may seek out expert advice — none of which necessarily having much to do with the technically sound answer to a financial problem. Rather, these 10 reasons speak to broader motivations for seeking out advice. They include:

  1. To reduce complexity: There’s a never-ending supply of information on the internet, but having the information doesn’t mean consumers know what to do with it. This is especially true in a domain as complex as finance, where it’s difficult to distinguish the meaningful from the irrelevant or from the occasional pure bunk. An advisor helps highlight which information actually matters.
  2. To take action: A corollary challenge to the sheer volume of information available at our fingertips today is that not only can it be difficult to separate the signal from the noise, but that the flood of information may be so overwhelming that it causes a sort of analysis paralysis, where the overwhelming number of choices results in inaction. An advisor can help someone take decisive action.
  3. To help make better tradeoffs: Simple trade-offs are easy to evaluate — e.g., a CD yielding 2% is better than a savings account yielding 0.5% — but complex trade-offs require much more evaluation. For example, is it better to retain the flexibility of the portfolio as well as the risk, or to annuitize assets for a lifetime stream of income that also eliminates any possibility of things getting better than they are today? An advisor can help people rationally evaluate trade-offs — despite a whole host of behavioral biases — and provide the insight and wisdom that come from having confronted the same situation many times before.
  4. To increase confidence: Even after doing all the homework and choosing a path, a second opinion is still valuable to help ensure nothing important is overlooked. Even if the decision and outcome don’t change — and the second opinion simply reaffirms the original choice — it’s still reaffirming to get the confirmation. An advisor can provide confidence-building validation as an informed second opinion.
  5. To feel safer: Because stressful decisions are just that, it’s often just outright relieving to know there’s an expert to rely on. Our brains literally offload the work of decision-making when an expert is involved, sparing us from even trying to figure out what the best path forward should be — and the worry that we may have chosen poorly. An advisor can relieve the stress of wondering if the decision being made is truly right.
  6. To offload unpleasantness: In some cases, the blocking point for someone to do their own research and analysis isn’t that they don’t have the skills, time or mental fortitude to handle the stress of the decision. Rather, they don’t particularly like or want to do it. Indeed, they would rather do something — anything — else with their available time. An advisor can handle tasks that people don’t want to spend time on.
  7. To have someone to blame: It is common for many couples to delegate financial responsibility to one member or the other. For some, it is incredibly stressful knowing that if their situation takes a turn for the worse, they must face the wrath of an unhappy spouse or other family members. Delegating at least partial responsibility to an advisor can help reduce how often couples blame each other for their financial woes.
  8. To make someone else happy: While individuals generally seek out advice for themselves, sometimes the purpose of meeting an advisor is for someone else’s benefit. This may simply be down to someone else demanding that they seek help — e.g., a parent saying, “You need to find an advisor because you can’t handle this inheritance by yourself.” An advisor often supports relationships that go beyond just the client themselves.
  9. To receive encouragement: For most people, money is a subject more taboo than religion, politics or sex. This makes it especially difficult to find words of support and encouragement from friends and even family in the midst of making difficult decisions or changes. An advisor can provide emotional support and encouragement, serving as a sounding board for the client’s financial fears and challenges — topics that can’t otherwise be shared with anyone else.
  10. To save time: Even in the best of circumstances, a consumer who can both sift through the voluminous information to separate the signal from the noise and determine the best course of action will still likely take a lot of time to go through the process — a luxury not everyone has. Even if the individual may ultimately arrive at the right answer down the line, an advisor can help save time up front and in ongoing engagement.

These reasons really help illustrate how advice-seekers may not actually just want factually driven advice. A client may not have wanted a recommendation, but rather they wanted the advisor to manage and implement everything for them. In turn, this helps explain why clients don’t necessarily follow through on a recommendation when one is provided to them.

Advisors don’t follow their own advice
Can you live up to your own guidance?

Accordingly, Somers suggests that advisors begin every client meeting asking these questions:

  • “What would make our time together today the best use of your time, energy and money?”
  • “What are you hoping will happen as a result of our meeting?”
  • “Aside from the obvious, is there anything else that brings you here today?”

Similarly, advisors can then wrap up each meeting by asking questions along these lines:

  • “When I asked you about what you most wanted to accomplish as a result of our meeting today, you told me [insert answer here]. Did we accomplish that?”
  • “Is there anything that may still be leaving you unsettled or unsure?”

Beyond understanding client motivations for seeking out advice in the first place, Somers also observes that there are multiple domains that can impact whether or why a client may or may not implement the advisor’s advice.

Following the acronym FACTS, the five domains are:

  1. Financial history and circumstances: Consumers facing scarcity or high-stress personal circumstances can hyper-focus on a single issue, thereby missing the bigger picture. This can increase the challenge and complexity of making advice stick. In addition, money scripts learned in one’s early years can shape later views and approaches to financial problems, making it necessary to understand the client’s past to understand what kind of advice they will even be willing to take on.
  2. Advice characteristics: A lot of the advice that advisors give may be difficult to follow, often addressing broad lifestyle changes that are long-term and preventative, meaning there’s no immediate relief or positive results to reinforce the behavior. Thus, why it’s often beneficial to break up advice into smaller pieces, and encourage people to act against their impulses — e.g., by ignoring all those commercials and ads, and by not doing what everyone else is doing.
  3. Client characteristics: Notwithstanding their decision to see an advisor, some clients are not ready to actually make a change — a phenomenon credited to psychology researcher James O. Prochaska — and even those who are ready often still need hand-holding or support to keep them motivated. Advisors tend to think that the advice is done once clients are given their recommendations and have left the office, but the behavior change research tells us that relapse is normal, and that most people need reinforcement later to stick with a difficult change. Thus, why a key part of advising toward behavior change is not just about telling clients what to do, but also helping motivate them to do it.
  4. Team and advisor factors: A key discovery of the non-compliance-turned-non-adherence research in medicine is that the patient’s follow-through on the recommendations provided is a shared responsibility of the advice-giver and the advice-receiver. This means that not only is it important to avoid using too much industry jargon that clients don’t understand, but it’s equally important to make sure that clients feel emotionally safe and don’t feel judged for the problems they’re bringing to the table.
  5. Social and environmental factors: Even when a client comes in for advice, the advisor is likely not the only person influencing their decision-making process. Financial decisions often have real-world ramifications for other people in the client’s life, so this tendency is understandable. For instance, it’s one thing for and advisor to say that parents should cut off their adult children’s support to secure their own retirement, but are the parents really ready to have that conversation with their kids? At a minimum, understanding social and environmental factors highlights the kinds of additional support — emotional, informational, instrumental or simply companionship — that clients may need to see the advice through to the end, and gives the advisor an opportunity to help clients anticipate how they’ll handle those difficult situations.

The key point is simply to acknowledge that a complex set of reasons determines whether a client will or will not absorb advice.

Somers suggests a series of three readiness questions that advisors should consider asking at the end of any meeting where recommendations are given. They are:

  • “How would you feel about [insert recommended action here]?” I.e., does the client really want to focus on this?
  • “If you decided to [insert recommended action here], how would that benefit you?” I.e., does the client really see the benefits and have an emotional connection to following through?
  • “If you decided to go ahead with this step, how confident are you that you could do it?” I.e., if the client doesn’t believe they can succeed in implementing the advice, they won’t.

Advisors aren’t taught how to deliver advice in such a way that the odds that clients will follow through are maximized. Advisory firms don’t have any standardized way to assess and measure the quality of their advice-delivery process, and there is not yet any adherence research in the planning domain.

Nonetheless, just as adherence research in medicine has substantially changed the way doctors provide advice and recommendations, so too can advisors consider how to make our own advice stick better.

So what do you think? What are some ways that advisors can help clients adhere to the advice that they’ve asked for? Are there ways to tweak your workflow to make it easier for clients to implement your recommendations? Please share your thoughts in the comments below.

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