As a financial professional, how comfortable are you with being on the receiving end of financial advice? How comfortable would you be taking financial advice from another financial planner? These questions are fundamental to understanding how your clients may feel when they decide to engage in a financial advice relationship.

As someone whose job it is to help others on their financial journey, it’s important that financial professionals understand their own financial socialization, money biases, and beliefs. This means engaging in the same soul-searching and sharing you expect—and want–of your clients.

Financial Psychology for the Planner

The examination of clients’ financial psychology has become ingrained in the practice of financial planning to help financial professionals strengthen their listening and communication skills with the goal of better client relationships—more action, more trust, more well-being. It’s also what made the industry more aware of how a client’s financial psychology can impact the success of the planning process.

Yet, it’s important that increased awareness is not only limited to clients. Just as clients’ lives may have burdened them with experiences that set up roadblocks to financial wellness, financial professionals also have life experiences that have impacted them. These experiences may even be why they became a financial planner in the first place. Understanding the self, professionals included, is key to connection in client-advisor relationships and the change that takes place within those relationships.

Further, when the professional understands themselves, this also helps keep them from bringing their personal background into the process of working with clients. By learning about and acknowledging your biases, you can address them for your own peace of mind, but more importantly, recognize them when they start to insert themselves into client relationships. Advisors want to give unbiased advice that serves the client, not inadvertently give biased advice hidden in the financial professional’s own, unexplored, money history.

Moreover, personal beliefs and biases are something everyone must deal with and acknowledge. But financial professionals are not alone or left to their own devices to do this important self-work. There are practices available right now that financial planners can do to maintain awareness, so they don’t interfere with their client relationships.

Do Your Own Financial Discovery Exercises

Does your client process include questions and exercises designed to help you, their advisor, understand their financial psychology? It may seem obvious, but if the client process includes psychology and emotion-based tools to help clients get in touch with their money stories, advisors want to be sure to complete these exercises for themselves. These might include financial self-discovery tools such as the Money Egg Exercise and Klontz Money Script Inventory.

Just as these tools can help financial professionals understand their clients, they can also help them understand themselves. Not only that, but they’ll give the financial professional a valuable perspective on how difficult sorting through personal financial beliefs can be. Financial professionals ask clients to do this internal work all the time—it can be hugely beneficial to go through the work too so that advisors can better connect with clients and also have empathy for what they are going through when this work happens to be emotionally heavy.

Avoid Transference and Counter-transference

Do you ever meet someone new and are immediately struck by who they remind you of? This is what transference and counter-transference are referring to and it can happen in client meetings. These are terms derived from the world of therapy and psychology and it’s a phenomenon that happens to us automatically as a way for our brains to figure out how to interact with and relate to new people.

In the context of financial planning, this tendency can be problematic when it impacts our ability to give, receive, and follow advice. For example, on the transference side—when the client transfers onto the financial professional—a client’s financial planner may remind them of someone they know with whom they have a judgmental relationship. This could impair the client’s ability to share their spending habits with the planner because of that fear of being judged or refuse to follow well-meaning and important advice.

When a financial planner experiences counter-transference—the planner projects onto the client—it can become difficult, as just one example, to say no. For instance, perhaps the client reminds the advisor of someone in their life to whom they’ve had a hard time saying no—like a parent or a child. Now in the client meeting, this may impact the planner’s ability to have difficult—but necessary—conversations with that client. The client needs to stop spending money and the advisor is having a hard time telling them because the advisor is reminded of their grandmother, and no one wants to say no to their grandmother.

Moreover, one of the best ways for financial professionals to keep counter-transference from taking place with a client is for the planner to identify any personal triggers they have that could impact their client relationships by completing money histories or exploring money memories and the impact of money on relationships in their life. In the meeting, advisors will find it easier to give hard advice by simply acknowledging and recognizing the differences between the client and the person being mentally associated with the client—viewing that client as the unique individual they are such as recognizing the client is from Nevada and grandma is from Wisconsin.

Establish a Financial Planning Relationship of Your Own

When I meet financial advisors, I often like to ask them if they have their own financial advisor. And when they say they don’t (which is the common answer), I’ll ask, “Why?” or share the fact that Daniel Kahneman (Nobel Prize-winning behavioral economist) has a financial advisor, and does that fact not end in a near obvious conclusion that everyone should have a financial planner including financial planners? If Daniel Kahneman can’t beat the market or deal with his biases and heuristics, nobody can!

What I want financial professionals to gain from this common and often humorous exchange is that there is value in putting yourself in a client’s shoes. When advisors have been providing financial advice for a while, they run the risk of forgetting—although not intentionally—how uncomfortable it can be talking about money. For empathic reasons alone, if advisors haven’t sat on the other side of that table and had to talk about the financial decisions they’ve made—good or bad—it’s hard to fully understand the stress or fear clients may be experiencing. Not only that, but they also won’t have the opportunity to feel the subsequent joy and contentment that can come from sharing about one’s financial situation and working through financial concerns with a trusted financial partner.

Rationally, advisors know that they would not actively judge or berate a client for the financial decisions they have made or the reasons they have made them, but consumers of financial advice are often taught to be afraid or wary of financial professionals. Consumers face a lot of anxiety when it comes to meeting with a financial professional to talk about their money. By putting yourself in that position, you’ll be better able to empathize and help them get past these fears.

Self-study Improves Authenticity

A final reason for the importance of doing one’s own work is authenticity. Being authentic and understanding one’s own money story is an important part of the financial planning profession. By spending time learning about and understanding one’s own financial socialization and money biases, financial professionals are embracing an integral part of the advisor-client relationship. Taking a proactive approach to reducing the impact of advisor biases will enable you to strengthen the value of the services you deliver to your clients.

To learn more about financial psychology tactics to elevate your planning services, I encourage you to watch the on-demand recording of my recent panel discussion: Yours, Mine, or Ours? I also regularly publish articles, like the ones linked in this article, on the Kitces.com platform. Any article about a question that might be good for a client is fair game for advisors to ask themselves and one another to keep growing both personally and professionally.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

The views and opinions expressed by this blog post guest are solely those of the guest and do not necessarily reflect the opinions of eMoney Advisor, LLC. eMoney Advisor is not responsible for the content, views or opinions presented by our guest, nor may eMoney Advisor be held liable for any actions taken by you based on the content, views or opinions of the guest.

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