Blue Chip Issue 86

CLIENT ENGAGEMENT | Behavioural finance
BLUE
CHIP
The financial planning profession is evolving. Financial
advice is not what it used to be or no longer sufficient.
Expectations of respected financial planners continue
to rise, beyond the previous shift from selling to
advising in the Sixties, the introduction of the steadfast sixstep
financial planning process in the Nineties, and now
towards an increasingly broader, and client-centred, offering1.
The impact of behavioural finance, over the last 20 years
especially, has meant that financial planners are not only
expected to track and tweak financial behaviour, but to skillfully
shift the client’s relationship with themselves and their money,
to modify behaviour fruitfully. As Michael Kitces reminds us,
“Giving advice to clients is a terrible way to help them change
their behaviour” and that developing “more therapeutic skills”2
may be the antidote to hackneyed advice.
These developments explain the burgeoning influence of
behavioural coaching on the profession, now surely recognised
as fundamental to a financial planner’s value proposition. And
as financial planning practices continue to advance, particularly
post-pandemic, we start to realise the importance of mental
health and wellbeing on clients’ financial health.
The realm of mental health is now a domain that financial
planners require cognisance of, at the very least. Sooner than
one thinks, it will be vital for planners to have a recognised level
of skill in navigating mental health issues.
There may be some disagreement or denialism among
practitioners as to their roles and responsibilities, but the link
between money, emotions and mental health is well known
and more prevalent than ever. So much so that forwardthinking
countries have necessitated institutions dedicated
to understanding and dealing with this challenge, such as
the UK’s Money and Mental Health Policy Institute launched
in 2016.
One undeniable fact, central to financial planning, is the link
between mental health, poor decision-making and financial
difficulties. In short, worrying about money can affect your
mental health and a mental health condition can affect the way
you manage your money. This creates a “vicious cycle”3. More
specifically, “common symptoms of mental health problems,
like increased impulsivity, low motivation, unreliable memory
and difficulties concentrating can make managing money
significantly harder”4.
What could this mean for financial planners today, and their
continued professional development?
Firstly, an awareness of the key themes within mental
health is fundamental.
The stigma of mental health, in all its forms, is a destructive
force, a barrier to the acknowledgement of personal struggle
and therefore a chokepoint to receiving the correct help
timeously. Encouragingly, attitudes towards mental illness are
shifting, again thanks in part to the pandemic. Covid’s silver
lining is surely that society has been forced to acknowledge
its humanity, its vulnerabilities, and this has counterbalanced
the stigma of having and talking about mental health concerns.
Planners who are aware of the damaging effects of discrimination
and judgement can show compassion and make a significant
difference in the lives of their clients.
As financial planners are on the frontline, at times being
the first person a client confides in, they play a part in making
mental health services accessible, another current theme. Most
people don’t seek help, and advisors can play a “gateway” role,
ideally providing clients with a pathway to support. This includes
having a trusted set of mental health professionals on hand,
acknowledging when the conversation has moved beyond the
scope of one’s expertise or comfort levels and knowing how to
refer appropriately.
Secondly, advisors will need to build appropriate and advanced
interpersonal skills.
Learning, and especially practising, one’s capacity for deep
listening and generative questioning are fundamental facets of
advancing one’s skills. There are some simple, game-changing
techniques planners could employ immediately, and which also
allow room for continuous improvement. Better use of silence,
being curious, collaborative, authentic and confident are all potent
capabilities. Several good coaching programmes, specifically
geared for financial planners, cover these and other essentials.
Thirdly, for those committed to integrating this approach into their
practices, a level of intrapersonal development will be required.
Intrapersonal development is personal “work” that includes
self-care, maintaining emotional wellbeing and the ability
to self-regulate, to name a few. Self-regulation, the ability
to understand and manage one’s internal states (sensations,
feelings and thoughts), is vital when listening to a client. This
may involve dealing with one’s own frustration or doubt,
common concerns among planners faced with unfamiliar
situations and awkward conversations.
Some planners who fully embrace
and develop inner maturity with this
approach may eventually be confronted
with the most uncomfortable of inner
conversations, ones in which they will
need to demonstrate courage. And that is,
the question of their own mental health
and wellbeing, and how it relates directly
to their ability to serve clients.
In summary, I invite you to be aware of
current mental health matters, continue
to upskill in the service of your clients,
and take great care of yourself and your
own mental wellbeing. I believe that
doing so will put you in a great position
to invest in the wellbeing of others,
particularly your clients.
Roland Cox, Executive
Coach, Aspiral Coaching
and Leadership
1 Lawson, Derek R., and Bradley T. Klontz. 2017. “Integrating Behavioral Finance, Financial Psychology, and Financial Therapy into the 6-Step Financial Planning Process.” Journal of Financial Planning 30 (7): 48-55.
2 Kitces, Nerd’s Eye View https://www.kitces.com/blog/kristy-archuleta-kansas-state-university-of-georgia-podcast-financial-therapy-association-counseling-communication/
3 https://www.mentalhealthandmoneyadvice.org/en/managing-money/how-are-mental-health-and-money-worries-linked/money-worries-and-mental-health/
4 Money & Mental Health Policy Institute (UK) https://committees.parliament.uk/writtenevidence/5460/pdf/