Marty Kurtz, a financial planner for nearly four decades, past Financial Planning Association president, and long-time mentor of mine, has been known to say, “Advice kills conversation.” This statement initially shocks financial planners and elicits an instant “deer in the headlights” response, followed seconds later by the squinted eyes and pursed lips of deeper thinking, and finally ending with a raised eyebrow and slight head nod of somewhat reluctant agreement.
It’s interesting to think about what is actually occurring in the communication dynamic when someone offers advice. Essentially, the advice giver indirectly says, “You can stop talking now; I’ve heard enough. I know the answer because I understand your situation better than you do. You’re welcome.” I mean, advice-giving is actually a bit passive-aggressive, if you think about it.
If you are in the “business of advice,” this should not be taken lightly. Consider the numerous studies on human motivation conducted by Richard M. Ryan and Edward L. Deci that led them to formulate the Self-Determination Theory. When studying the effects of various autonomous (self-directed) or controlled (directed by another) motivators, those who chose their own methods for completing a task or learning something new were more engaged in the activity and committed to its completion. In contrast, those who were directed by others (even if the context was very subtly controlled) showed less interest in the activity and achieved fewer of the tasks at hand. This is true of all age groups. However, the results I found to be most surprising were that even when people asked for advice or direction, they showed a level of disengagement once the advice was provided.
In the book, Nudge: Improving Decisions About Health, Wealth, and Happiness, authors Richard Thaler and Cass Sunstein suggest a method for providing advice in a way that helps to maintain an autonomous supportive environment, allowing the client to ultimately select their own path. By becoming “decision architects,” you can lay out various scenarios or provide several ideas for approaching a task. By collating information and listing the pros and cons of each choice, the client can choose the option they feel most compelled to pursue.
Even when people asked for advice or direction, they showed a level of disengagement once the advice was provided. Share on XNow, you might wonder, “After providing options to choose from, what about the clients who just want me to tell them what to do?” Before jumping in with your opinion, I would suggest that you first consider why they might be requesting your direction.
Could it possibly be that they have low self-efficacy when it comes to their personal finances? Do they believe they are not capable of learning, understanding, or making good financial decisions for themselves? If this is the case, then providing your advice might have a detrimental effect and exacerbate their feelings. It would essentially be communicating to the client that you agree that they do not have the skills or knowledge to make decisions in their own best interest.
Or, could the reason be that they haven’t had enough opportunity to process the information and form their own opinion? Often, the questions and issues financial planners discuss with their clients are topics they haven’t spent time thinking about before. Because these topics are new, their brains likely lack the neuro-pathways to fully connect the dots and process an opinion about which options best align with who they are and the lifestyle they want. When we jump in too quickly with advice (even when they ask for it), we rob them of the opportunity to realize their own insights.
Instead, you can simply suggest they spend time thinking about all the options, and you will connect with them to discuss their thoughts in a few days. Another option would be to tell several stories about the emotional and practical reasons why different individuals or families might choose different options. This can help them to evaluate the options from different perspectives while also avoiding sharing any bias you might have. Just keep in mind, if you want to nurture your client’s self-efficacy and have full engagement and commitment to the plan, it’s important to emphasize that the decision for which path they choose is theirs alone.
With an understanding of this research, financial planners are challenged to shift their thinking about the role they play in a financial planning relationship. Although financial planners have the essential expertise necessary to give financial advice, our growing knowledge of human behavior suggests they may be more effective in acting as facilitators of self-discovery, collators of relevant information, architects of a decision-making framework, and thinking partners through the ups and downs of their client’s life journey.
- Amy N. Mullen, CFP®