Uncomfortable conversations can improve financial planning outcomes

By Sharon Moller, Financial Coach at Old Mutual Wealth

Sharon Moller

Clients and their financial planners who shy away from uncomfortable conversations risk compromising their life financial plans. 

Difficult or uncomfortable conversations range from something as simple as discussing advice or product fees through to the emotional interactions that take place following death or illness in a client’s family. Most of us dread difficult conversations because we assume certain reactions that might be difficult to manage. It is these assumptions that often hold us back.

The Conversation Model is a framework for financial planners to engage with clients on outcome-critical aspects of the wider financial planning conversation. The model uses a series of questions to clearly understand the client’s situation; then progresses to an open engagement in which the client offers possible solutions to the situation; and culminates with a combined assessment of potential actions. 

The Conversation Model is valuable in educating clients about their situation and often leads to clients proposing the best possible solution for themselves. Abandoning prejudices, addressing fear and building trust are critical components in client and financial planner interactions. 

Parties to the financial planning conversation must abandon their preconceived ideas; be present at all times; and place their trust in the process, an honest, open, and transparent conversation is often the best way to remove obstacles in a client/financial planner engagement. 

It turns out that many obstacles that prevent progress on important financial planning actions have less to do with what a planner has done or not done, and more to do with concerns that clients have and struggle to articulate.

Financial planners who showed vulnerability during the financial planning conversation could encourage clients to speak more openly about their fears. Showing vulnerability can help with breaking down communication barriers, thus creating the space for clients to talk more about aspects that trouble them, but this should not be confused with over sharing. 

Talking about money can be scary and showing some vulnerability when interacting with your clients creates a space in which they can unpack issues they have not even realised they are concerned about. It is also a great communication tool to allow clients to feel more at ease and ask questions without the fear of being ridiculed by someone who knows more about the world of investments and savings than they do.

Being vulnerable or “putting oneself out there” leads to an honest conversation about the way the financial planning process is unfolding, and quickly gets to the heart of what might be going wrong. 

For example, there are clients who are adamant that they will work deep into retirement to make up for the shortfall in their accumulated retirement capital, but during an honest and open discussion with these clients they often concede that their own vision for retirement is outside the bounds of possibility. 

We sit with a lot of clients who have convinced themselves about what their retirement is going to be like. Many believe that they will simply earn an extra income when the reality is that this will not always be possible, without delving deeper and thinking about what further actions need to be considered. That is why there is so much value in having honest conversations and being vulnerable.

Looking at whether it was possible to maintain trust relationships through a virtual advice process, an important observation about trust is that the client, once they set out on the engagement process, has already decided to trust the financial planner. It is then up to the planner to hold that trust and if they break this trust it will be difficult for the client to trust again.

It is, however, important that the trust relationship is based on a holistic financial planning process designed to illicit certain responses from, and outcomes for, the client.

The aim with financial planning conversations is for the client to have that “aha” moment and see something new about their relationship with money; if they see new possibilities, then that becomes their new story. It helps financial planners to be authentic, to see things from the client’s perspective and to always ask the tough questions, regardless of the personal vulnerabilities these questions might expose.

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