by Dan Atkinson
I’ve just finished reading Advice That Sticks by Moira Somers as part of a book club. One of my reasons for signing up was to actually get to the end of a book for once! Having a group of people holding each other accountable is really good at keeping you to task. My reading procrastination reminded me of my clients, and why they don’t always complete the to-do’s we set for them.
The Cognitive Tax
Clients often seek advice when they’ve hit a pain point, much like how we might hold off going to see the doctor until the pain is unbearable. After all, it’s hard to get to what we need to do when there is something going on behind the scenes causing stress, creating anxiety, and using up our finite cognitive resources.
When we are going through situations like this we hunker down and focus on the situation: solving and surviving it. As we pull through difficult situations, our cognitive bandwidth reduces, leading to a temporary but significant lowering of IQ score (13 points on average according to Somers). In fact, even imagining the stressful situation can cause us to experience this cognitive tax.
I suspect that one of the reasons I had struggled to follow through with the intention of reading is just not having capacity at the end of a busy day. Let’s take a moment to acknowledge this in our lives and importantly in our client’s lives. Are we asking them to take on too much to process? Are we aware of their cognitive commitments?
Somers also writes that people with which we surround ourselves can be a great help or a huge hinderance. Many people have lost money by taking advice from ‘Dave down the pub’ or a well-intentioned but uninformed family member. It’s quite easy for clients to forget that they have paid a professional to help. In the book Somers suggests identifying these influencers and building strategies to use their influence for the better, to stay on track. For me joining a book club full of professionals I respect was a great social solution.
Putting The Lesson Into Practice
I shared this quote from the book with the financial planners and paraplanners at EQ Investors (emphasis mine):
“Giving good advice well requires three things of us:
(1) That we understand and harness our clients’ motivation and concerns;
(2) That we help provide them with clear direction on how to reach their goals; and
(3) That we have a plan for dealing with the inevitable obstacles that will crop up along the way.”
Understanding what a client really wants in life is a key skill for a financial planner. However, we don’t always harness our clients’ motivations effectively, because our action recommendations might be quite ‘boring’ and slip down the client’s priority list when cognitive tax starts to bite. At EQ Investors, we’re creating a clearer connection between what the client feels is important and the outcome of the actions we are proposing, using titles like ‘what is important to you’ and ‘why should you do this’ in our suitability reports.
The last thing many clients want to read after a busy day is a complex report full of abstract concepts that appear to have no relevance to the matter at hand. Therefore, when providing clients with our recommendations we focus on what they need to know to make an informed decision. Information overload gets in the way of enabling clients to see the direction on how to reach their goals.
Avoiding information overload is a good start to dealing with obstacles. The key seems to be in the deliberate exercise of emotional intelligence (EQ is the measure of emotional intelligence). We need to ensure (and check) that we have understood our clients and are addressing their actual concerns rather than operating on auto-pilot. It’s important to dream big, but sometimes the leap to get there is daunting. If they fail to start, our clients will fail to realise their goals. Break it down with your clients into agreeable, manageable steps. Ask them what they would find helpful to keep them on track.
Hopefully not only will I make a dent in my ‘waiting to be read’ book pile, but we will help more clients to follow through with the advice we give. I hope there’s a few ideas in there for you or at least a challenge to read this excellent book.