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Financial advisers sometimes find that some clients simply don’t listen to their advice. Just as physicians face a lack of patient compliance, financial planners may wind up nagging a client for months (or years) to follow through with even the basics (buy life insurance, track monthly expenditures, draft a will and advance directives, etc.). Clients claim they’re too busy or distracted, or they resist spending money (on insurance premiums or an accountant, for instance).
Research shows that only about 20% of people bridge this intention-action gap and take corrective measures in the near term to resolve a problem. That means as many as four in five clients may not heed their adviser’s suggestions, even if they agree the recommendations make sense.
Advisers respond to noncompliance differently. Some fire clients who consistently refuse to follow through over time. But most will keep on pushing.
“Clients need to be prompted, and we stay on top of them,” said Ken Van Leeuwen, a certified financial planner in Princeton, N.J. Whenever possible, Van Leeuwen follows up with clients on the spot. If he suggests they see an estate planning attorney, for example, he’ll reach for the phone and make an appointment for them while they’re in his office. He may even go with them to the meeting.
Similarly, Michael Caligiuri has learned that the more he can get done with clients present, the better. They are busy professionals “who don’t want to do this stuff because it’s kind of annoying to them,” said Caligiuri, a certified financial planner in New Albany, Ohio.
If he recommends changing a client’s investment allocation in a 401(k), for example, he may instruct them to log onto their account and walk them through the process. They can then leave his office with the task completed. Caligiuri also keeps a running to-do list with bullet points for each action item. He and a client will review the list periodically, and Caligiuri will follow up to ensure that pressing issues are addressed.
“It can take multiple rounds of contacting them,” he said. “But that’s why they hire you, to be there to help them get through it.”
Caligiuri uses fear as a motivational tool as well, especially when clients chafe at buying life- or disability insurance or umbrella liability coverage. He’ll quote boxer Mike Tyson (“Everyone has a plan until they get punched in the mouth”) to get people to stop procrastinating. “Sometimes you have to scare people a little bit so that they act,” Caligiuri said.
For Fred Hubler, an adviser in Valley Forge, Pa., gaining client compliance involves drawing a connection between their present and future. He often asks, “What needs to happen one year from now for this to be a great relationship?” He uses their answer as a springboard to propel them into action.
“The future state is built on their values and what they’ve already told us they want to do,” Hubler said. “So I’m not trying to shove anything down their throat. I’m just trying to get them where they want to go.”
More: Here’s how over 16,000 financial advisors invested their clients’ money last year
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