Influence Clients' Behavior to Plan for Retirement | Lord Abbett

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Practice Management

By understanding the roots of clients’ concerns, advisors can steer clients to take steps to ensure a sound financial future. 

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).

Economic turmoil and advances in technology and medicine over the past decade have combined to expand the financial advisor’s role beyond providing sound investment advice. Advisors now face the complex responsibility of not just guiding clients who must plan for the reality of living longer but also managing clients’ anxiety and at times even irrational approaches toward their retirement and financial future.

However, this challenge also provides an unprecedented opportunity to strengthen connections with clients and solidify the role of primary trusted advisor.

The key lies in the openness of advisors to reframe the parameters of their client relationships. There must be a willingness to discuss clients’ fears and concerns about money in order to learn more about the psychological impact of retirement on their behavior. By understanding the genesis of their resistance, advisors can influence clients to take steps to ensure a sound financial future.

Redefining Retirement
Most advisors I work with express concern about their clients’ unwillingness to realistically plan for their financial future.

There are numerous reasons that can account for this behavior. Many baby boomers are still supporting adult children and/or taking care of elderly parents. This heightened sense of obligation toward family can create a “victim” mentality. They feel as if they have no real choices and are stuck with the monetary expectations they have established.

Just the word “retirement” can elicit a negative visceral reaction in people. Some of your clients may find it frightening to contemplate giving up their current career identity and moving to a different stage of life.

Even if clients know what they want to do in this next phase, it can be particularly unsettling if they don’t know whether they can afford to maintain their desired lifestyle. A typical reaction for individuals experiencing this type of emotional distress is to shut down and avoid the things they know they “should” do.

In addition, it is difficult for many people to accept the aging process gracefully. To prepare for all the emotional and physical issues that can affect your clients in this next stage of their lives, they must be willing to view themselves through a different lens and acknowledge the potential need to make financial sacrifices. All these factors can combine to make the advisor’s job even more difficult.

An August survey by Gallup and Wells Fargo found that about half of all investors said they were worried that their wealth won’t see them through retirement. About one in five said they were “extremely worried.” Those fears, coupled with investors’ irrational behaviors and biases, can disrupt any client’s retirement dreams.

Delving Deeper
The key to influencing your clients’ behavior and guiding them to make effective investment decisions is to understand not only their fears but also how those fears impact their willingness to make behavioral changes.

An essential step in establishing that trust is to have a deeper conversation with clients about the tough decisions they must make to realize their retirement goals. Focus on questions that will help you understand each client’s personal history with money and his or her fears about the future. Regardless of someone’s current job or financial status, many of our money-related behaviors and decisions are rooted in irrational thinking that stems from our past.

For example, because of their experiences, many people are so fearful of losing control in general or suffering a financial loss specifically that they may be reluctant to take your advice on the best investments to make. Or perhaps they are unwilling to face the reality of lifestyle changes they will need to make when they are no longer receiving a regular paycheck.

In some cases, clients may not want to tell you the truth about why they are resisting your suggestions to change their pre-retirement behavior because they are embarrassed and don’t want to be judged. To add value to your relationships, you must be aware of the attitude you communicate—verbal and nonverbal—when speaking with them.

Assessing Resistance
Once you are able to accurately assess your clients’ situations and the obstacles that prevent them from engaging in the behaviors essential to ensuring a successful retirement, you can begin to guide them toward taking the necessary steps to change. First, of course, you have to help them understand their resistance to change—change can force unwanted self-reflection or create fear of the unknown, pose an unclear purpose or may mean a sense of personal loss—and to acknowledge the potential impact of not addressing the problem.

Then you have to gently guide them to shift their thinking. The goal of this part of the conversation is to respectfully help them realize the irrationality of some of their previous investment decisions and start considering new behaviors that will have more positive results.

Five Keys to Change
Now that you have engaged your clients in a different kind of conversation, it’s time to design a plan to ensure they prepare—rationally—for retirement. By creating a plan that incorporates the following actions on your part, you will increase the chances of a successful outcome.

1) Evaluate your willingness to confront your clients’ readiness for change. This includes having a clear and specific vision about what you want to achieve, and understanding that you may need to operate outside your normal comfort zone to get there.

2) Shift your mental framework and communicate more effectively. Learn to ask different questions—become a “learner” instead of a “judger.” Be transparent, manage expectations, and make no assumptions.

3) Break down complex behavior. Remember that most complex behavior is a conglomeration of simple behaviors, so drill down to divide your larger goal into bite-sized components. For example, if you would like your clients to evaluate future wants and needs that may seem daunting to them, divide the task into separate components—for instance, start by asking them to record for one week just their personal luxury spending, nothing more.

4) Be SMART: Set a model for change by establishing specific, measureable, action-oriented, realistic, and timely goals, and write them down. It has been proved repeatedly that when goals are written out, they become more powerful and effective, and accountability increases.

In addition, set target dates for clients to complete specific tasks and to revisit the plan with you on a regular basis to make necessary adjustments.

5) Encourage your clients to “just do it.” Behavior is easier to change than feelings. Gently let them know that it’s all right to take action even if they remain anxious about the process. Remind them that this is a long-term relationship and that you will continue to be available to give them reassurance and support.

The more you are willing to change your approach to working with clients, the greater your chances of successfully influencing their retirement planning behavior.

Once you have established trust and gained their confidence, they’ll know they can turn to you for guidance in making rational decisions based on professional knowledge and expertise rather than personal history and emotion.

—Denise P. Federer

Denise P. Federer, Ph.D., is a clinical psychologist, executive coach, and founder of Federer Performance Management Group. She has been a consultant to the financial services industry for 20 years.


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