The Science of Helping Clients Change

Journal of Financial Planning: May 2017


Much like an nba star playing basketball, the great change agents in our lives have raw talent and great instincts. But never underestimate the fundamentals—as Michael Jordan said, “Get the fundamentals down, and the level of everything you do will rise.”

As such, if you’re frustrated because you’ve told a client three times the dangers of going to cash and he keeps prodding every time the market dips, or if you’ve been unable to persuade an older client to stop pouring money into her good-for-nothing child, then perhaps some research-backed concepts and techniques on how people change might help.

Habits and Rules, Not Willpower

Psychologist Roy F. Baumeister studies a lot about human behavior, including what we call “willpower” and what he calls “self-regulation.” His studies have found that willpower acts like a muscle: if you use it, over time it gets stronger. The bad news? In the short run, it depletes.

Baumeister’s research also teaches two important lessons about willpower. First, before making a tough decision or performing a task that requires willpower, find a way to replenish it. Second, don’t rely on willpower any more than you have to; instead, leverage good habits and rules.

How can you use these concepts with clients? To help them replenish their willpower during a review meeting, offer them snacks that will give them energy. If a client is calling to push for a worrisome decision, suggest activities he or she would find reinvigorating. These might include physical activity (e.g., tennis), creative pursuits (e.g., cooking, listening to music), or rest (e.g., napping). As such, if a very stressed client calls and is pushing me to take a potentially damaging action, I ask her to sleep on it, take a brisk walk, or do something she loves; and only then decide whether to take action.

As for finding ways to avoid a client’s reliance on willpower, forging better habits is one option, but establishing black-and-white rules is sometimes easier. Get creative. For a client who overspends online, help him come up with a rule—but be sure it’s one he can live with. If your client shops during the workday, suggest that he experiment with only shopping online from home. If that’s too tough, ask if he would consider shopping only on even-numbered dates.

The key is to make the rule simple and clear. Ambiguity makes it easier for the human brain to make deals with itself for why an exception is okay. Also, try some limited-time experiments. See if the client can follow the rule flawlessly for one week. After the week, determine what span of time your client would be willing to try next—perhaps two weeks or even a month. The trick is to start small and grow your client’s successes.

Grow Their Self-Efficacy

Psychologist Albert Bandura of Stanford University studied a concept called “self-efficacy,” which is sort of like self-confidence, but it’s specific to a particular situation or task. For instance, a client may have high self-efficacy for saving but less for handling the ups and downs of market fluctuations. There are myriad ways to grow a person’s self-efficacy for a task, but none more powerful than having that person complete the task and literally prove to him or herself that success is possible.

This is why video games start easy. Game designers know that if you are successful early on, it will make you more resilient on later levels of the game when you are bound to fail more often.

The same is true for clients. Point out the areas where they’ve succeeded, perhaps even before they were your clients. Help them set initial goals they can reliably hit. Once they’ve succeeded, move to progressively larger challenges.

If you’re struggling to get them started down this path, Bandura suggests that we can also grow self-efficacy by watching others, hearing about the success of others, and even envisioning how we will accomplish similar tasks ourselves. For example, share success stories from other clients, but don’t only share that other clients have succeeded, be specific about how they’ve succeeded (without, of course, divulging confidential information).

Activation Energy—Getting Started

Activation energy refers to how much energy it takes to get started on something. For instance, I wanted to learn to play guitar, so I bought one and put it in my bedroom. I’d get home at night, sit down on the living room couch, and, you guessed it, I’d never play the guitar. Being a student of human behavior, I tried moving the guitar into the living room a few steps from the couch and … I still never played it. It wasn’t until I moved it to where I could reach it while already sitting down that I finally started practicing.

Humans are fundamentally lazy, but we can use this to our advantage. Make the good stuff easier—for example, establish periodic investment plans that run automatically to avoid having to chase clients down to get them to make their annual IRA contributions. And make the bad stuff harder—if a client spends a lot of money at the mall, recommend that she experiment with leaving her wallet locked in the glove compartment. If there’s anything your client wants badly enough, no problem and no deprivation. She can easily return to the car to get the wallet, but by raising the activation energy, she will likely spend less without prodding.

Clarity, Motivations, and Specific Plans

In my view, three main factors—clarity, motivation, and “waypower”—help clients achieve goals.

Clients may come into your office with a fuzzy view of their goals. “I’d like to live in a house on the lake.” I call these “watercolor versions” because they’re appealing but completely without detail. Help them go beyond their vague declaration. Ask “How big is the lake? How deep is it? How often will you go swimming or boating? What kind of boat will you buy or rent? Who is with you? How often are you there?”

These questions are not extraneous to the financial planning process. At the very least, they will help determine the details of how much achieving this goal will cost. At best, the clarity their answers bring can actually reinforce behaviors that will help your clients achieve their goals.

For certain clients, you may need to go a baby step further into their motivations. Ask them: “Why do you want the lake house? What would it mean to have it? What would it bring to your life?”

There is nothing better than working with clients who are pulled powerfully toward their goals. Instead of having to nag for their pledged contributions, or worse yet, correct their spending, these clients will take the lead on their action items.

But what about clients with plenty of clarity and motivation who don’t take the steps they need? These individuals might be suffering from a lack of belief that they will be able to achieve their goals. For them, you’ll need to help identify specific steps or actions to take. NYU psychology professor Peter Gollwitzer coined the phrase “waypower” to describe the power of knowing how to achieve what one cares about. As a planner, this is where you shine. Walk your clients through the steps they’ll need to take, and gauge their level of confidence in each.

Helping Clients Who Are Pessimists

It’s not uncommon to have a client you care about who is also a pessimist. In Martin Seligman’s famous book, Learned Optimism: How to Change Your Mind and Your Life, he describes how optimists and pessimists are different in their “explanatory style,” that is, in how their minds explain how the world works and why good or bad things happen to them.

He describes three characteristics of explanatory style:

1. Permanence (“Will it always be this way?”)

2. Pervasiveness (“Is it this way in all aspects of my life?”)

3. Personalization (“Is it about me alone?”)

A child with a pessimistic explanatory style who failed a history test would say, “I will always fail history. In fact, I’ll fail all of my subjects. In fact, I’m stupid.” An optimistic child who failed the same test would say, “I’ll do better next time. And hey, I’m doing well in my other subjects. This must have been a very hard test. I bet a bunch of others did poorly. Maybe the teacher will adjust the grades up.”

Neither style is right nor wrong; each has its function. Seligman would say that the best possibility is to be flexible. If you failed because you didn’t study, better to be real with yourself and try harder next time.

How can you help clients learn to be more flexible in their explanatory styles? When they’re worried about something bad happening, have them describe the worst, best, and most likely outcomes. Typically, their mind is obsessing about the worst-case scenario. Forcing them to think about the best and most likely cases pushes them to broaden their outlook. No need to suggest anything to them; this technique is most powerful when clients come up with their own outcomes.

Fom that point, most clients will want to take action. Ask them what would be the best strategy for each case, and help them identify the downside risk of using it if that case didn’t come true. Often, the downside risk of the worst-case strategy is so costly that even the client won’t want to proceed. And because it was the client’s own thinking, you won’t be compelled to explain the risk over and over each time he or she has a pessimistic moment. It is helpful, though, to email the client after your meeting to reinforce what he or she declared as the final decision.

It Won’t Happen Overnight

People are often slow to change, and they typically relapse. This can be frustrating, but it can also be relieving. Why? Because it means that even if a client has failed in the past, it doesn’t mean he or she will fail in the future.

James Prochaska, Ph.D., and his peers, when working to help people quit smoking, noted five stages people go through when undergoing change:

  1. Precontemplation
  2. Contemplation
  3. Preparation
  4. Action
  5. Maintenance

The key is to figure out which stage a client is in and work to move him or her to the next stage. If a client hasn’t even considered that his spending might be a problem, having him curb spending (i.e., jump straight to stage four) will just make him dig in his heels deeper. For this individual—in the precontemplation stage—the goal is to get to the contemplation stage. So you might ask him, “What would tell you whether your spending works well for you today and is putting you in a good place for the future?”

Only after your client has begun questioning whether spending is an issue, would you coax him to the next stage. Going too fast actually tends to slow things down. And, although it’s painful to watch a client struggle, try not to take on work that only your client can do.

Whether to Change Is Up to Your Client

Although it would be nice to succeed 100 percent of the time, that’s not reality—even for the world’s best psychologists (or financial planners). But by learning new techniques and practicing, we can get better.

There’s an old joke, “How many psychologists does it take to change a light bulb? Only one, but the light bulb has to want to change.” Our job is to put clients in the best possible position to succeed, but it’s ultimately up to them whether they do.

Kol Birke, CFP®, is senior vice president of technology strategy and a financial behavior specialist at Commonwealth Financial Network®, Member FINRA/SIPC, and independent broker/dealer–RIA.

General Financial Planning Principles