Not-So-Rosy Outlook | Lord Abbett

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Practice Management

Listen very carefully: the right start to a difficult conversation with a client could lead to a trove of actionable information.

As life expectancies increase and the economy continues to be unpredictable, you may identify clients who have to cut back, retire later or even return to the workforce. Rather than dreading these tough conversations, wouldn't it be nice if you had a way to communicate effectively with clients so that they not only hear you, but also respond with grace?

Not every conversation will be ideal. But there are ways to prepare your message and deliver it in such a way that can help you optimize the chances that your clients will thank you for verbalizing what they have been silently dreading.

Making It Safe
The human body has two nervous systems. The sympathetic system is the adrenalized fight-or-flight system. It's there to help us flee danger; unfortunately, it can't differentiate between a grizzly bear and a bear market.

The parasympathetic system is nicknamed the rest-and-digest system. It's the only state in which our brains are capable of problem-solving and rational thought. Our primary goal in any tough conversation must be to keep our clients in parasympathetic mode.

The book Crucial Conversations, co-authored by Kerry Patterson, assures us, "When it's safe, you can say anything." You can help clients feel safe by taking their emotional temperature, staying curious, speaking slowly and warmly, and taking extra time if the conversation becomes too intense. And, ironically, you can actually move the client forward more quickly by slowing the pace down at the beginning.

For example, before jumping into a conversation about their underfunded retirement, you might ask your clients to rank on a scale from 1 to 10 how comfortable they are talking about retirement. By checking in before launching in, you show that you're not going to go more quickly than your clients are comfortable with. As a result, you set them at ease.

If your clients tell you they have a comfort level of 2, at least they trust you enough to be honest. You may follow up with another question, such as, "Is 2 more like, 'I'd like to talk about it, but I'm a little on edge,' or 'I'm not ready to talk about this yet'?" You could also prompt your clients for strategies to make them more comfortable: "What might move you up to a 3 or a 4 on the scale?"

Asking your clients to help engages the problem-solving (rational) part of their brains. And by not setting an unrealistic goal (Don't ask, "What would move you to a 10?"), you show that you're listening and provide an achievable task.

If asking these questions doesn't feel like your style, you can take your clients' temperature simply by noticing certain aspects of their behavior. Are they talking more loudly or more quietly than usual? Is their speech faster or slower? Is their voice more confident or shaky? While people have different styles when stressed, these are some common signs you can pick up on.

Tone Intervention
When you notice a stress reaction, the first thing you can try is modifying your own behavior. Slow down your vocal pace, speak at a quieter volume and sit in a more relaxed position. Tweaking your own behavior will have an impact on those around you - because humans are wired subconsciously to mirror others' behavior and mood.

If altering your tone and posture doesn't work, find an excuse for a timeout. Tell your clients that you could use a glass of water and ask if they would like something to drink. If you can get your clients to join you in getting the drink, the act of standing up and walking helps to get the adrenaline out of their bodies more quickly, moving them back to the parasympathetic system.

If a water break isn't in order, make an excuse to show your clients something elsewhere in the office. For instance, it could be a picture of a sailboat you like, or even a stock market chart. If you need to, make up the reason they should see it: "Just as you've always dreamt of having a house on the beach, I've dreamt of sailing. Next year, I plan to rent a boat and sail in the Caribbean." The only real purpose is to get your clients to stand up and take a break, so they can calm down and get back to a place where they can have a reasonable conversation.

What Do They Understand?
Once you feel your clients are ready to return to the conversation, check in on their understanding of their situation. "We've gone over some of the projections - what are you thinking about when it comes to sustainably funding your retirement?"

It may seem obvious, but it's better to hear a summary of the situation in your clients' words than to assume you understand. Their phrasing can give you insight into how they're feeling; you can even use their response at a later date to motivate them to action: "Last time we met, you mentioned that you were worried about outliving your money. Let's see what we can do to try to avoid that."

Once your clients have had a chance to paint their own pictures, you should feel comfortable giving them your professional opinion. Again, it's valuable to ask permission: "I think you have a great handle on where you are. Would you be open to my giving a few thoughts based on what I've seen with other clients?"

What Do They Hope For?
Once clients have a realistic sense of their plight, a key question is, "Given the position you're in, what do you hope for?" If they are stuck and don't have any ideas to share, prod them with things they've told you they care about (travel, time with grandchildren, hobbies, etc.).

If they have not yet shared any goals with you, you may find a couple of the famous questions posed by life planning expert George Kinder to be good fodder. Paraphrased, he asks, "If you got a call from your doctor after having some routine tests, and the doctor informs you that you have five healthy years left to live, how would you use that time?" And, "What if the doctor says, 'You only have 24 hours left to live.' What will you regret not getting to do?"

These questions do an excellent job of ferreting out clients' goals. If it turns out that the couple can't afford some of their goals, work with them to understand the intention behind each goal. What purpose does it serve in your clients' life, and what is the most cost-effective way of accomplishing that purpose?

For instance, perhaps your clients are budgeting $10,000 every year to travel. Why? Maybe they want to learn about other cultures, escape the routine of their current life or spend time with family. There may be more affordable ways of accomplishing the underlying goal if the original one isn't within reach.

What Is Within Reach?
Find out what your clients believe they can afford and then help them understand how they can put themselves in a position to achieve their most important goals. Help them brainstorm, but realize that they will be more likely to take action (for example, reduce their spending) if they're the ones to suggest the solution. In other words, their commitment level is related directly to their feeling of ownership in the approach.

Of course, there will often be times when they'll ask for suggestions. Even in those cases, it's helpful to lead with a question or two. You might ask, "Do you feel that I understand what you're trying to achieve?" Or, "Would you like some suggestions, even though they may not be enjoyable?" When your clients know you understand what they want, and when they allow you to help, they will be more open to accepting your guidance.

Ultimately, it's their life, but you can play a powerful role by helping them clarify where they are, what matters most to them and what they need to do to improve their position.


Kol Birke is a financial behavior specialist at Commonwealth Financial Network®, member FINRA/SIPC, a registered investment adviser, in Waltham, Massachusetts.



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