Walking alongside a client during a transition

By Lee Rossini

After lockdown is lifted, there will be many clients who are faced with making difficult financial decisions. Some will have lost their jobs or their contracts to supply goods or services. They may be receiving a significantly lower income from their investments or their rental income may have dried up. Clients are facing big changes and they may need to accept that their lives are irrevocably changed. Research shows that most clients seek out a financial adviser due to a big change that has taken place in their lives. This is the time for the financial planners to step up and support clients in making the transition to their new normal as smooth as possible.    

There are many and varied transition events that can occur in life including but not limited to marriage, divorce, illness, generational transfer of wealth, the sale of a business or leaving home, and as we are currently experiencing, a pandemic. Dr Moira Somers, a Canadian psychologist with an interest in financial planning, speaks about the stages of transition during which a person moves from what was to what is. The stages include anticipation, unanticipation and ending in the new normal. Through the passage phase, in between an ending and the new normal, clients experience many different and intense emotions, including anxiety, fear, chaos, possibilities or opportunities. It is during this phase that financial advisers should be working with clients. 

Transitions change our fundamental identity; I used to be ... but now I am ...  Transitions can change our purpose and meaning, our emotions, our social group, our financial situation, our mental health, amongst many other things. Dealing with transitions takes perseverance, resilience and sometimes the need to rein in our emotions. 

Clients who are undergoing a transition often look for a new financial adviser to deal with the new person they have become. During a transition, clients can become ‘tapped out’ in that they are cognitively and emotionally drained. They have limited cognitive strength to deal with the issues around them as mental energy is a limited resource. To retain clients, financial advisers need to become more agile in dealing with clients in transition. This includes the ability to be present for what is really happening for the client rather than what the financial adviser assumes to be happening; this includes being aware of and moving at a pace which makes the client feel most comfortable. Clients in these situations should be treated with patience and respect.

During a period of transition, everyday chores and other non-routine activities draw on our mental energy. Non-routine activities include managing pain and stress, directing our attention to where it is most needed, making decisions, resisting temptations, controlling emotional displays, struggling with difficult emotions and learning new things whilst still trying to keep up with elements of a previous life. The level of mental energy available differs from person to person; however, it is a finite resource which is depleted daily and then needs to be renewed. Depending on the circumstances, it also changes over time. When a client is emotionally drained, they are often unable to find meaning in life which can result in a state of profound stuckness.  

Social support is essential at a time like this and the right financial adviser can be a trusted and thinking partner for the client. They can play an important role in supporting the client to regain mental bandwidth and to move in the right direction at the right speed. To do this, a financial adviser needs a high EQ (emotional quotient) to be able to read and support clients during transitions. This includes self-management and noticing their own levels of depletion and means of restoring mental energy. These skills are important as clients are wanting more than investment advice from their financial advisers. In fact, a failure to develop and offer these skills can have negative consequences for a financial advice business. Clients who are undergoing massive changes in their lives may leave their current financial advisers and look for someone new who they feel understands their needs and concerns better while they move from what was to what will be.

Source:

Dr M Somers, Transitions and Financial Planning, Masterclass, Financial Planning Institute Annual Conference (2019).