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Financial Advisor IQ

In the article, “If You Hit a Wall, Ask Your Client to Take a Test,” Angela was interviewed by Rachel Monroe from Financial Advisor IQ. Angela discusses the importance of knowing your client’s Money Personality to be better able to provide guidance.

If You Hit a Wall, Ask Your Client to Take a Test

Diagnostic tools can help you reframe the way clients understand their approach to finances.

August 26, 2016

This week we hear from Angela Dorsey, founder of Dorsey Wealth Management in Torrance, Calif. Dorsey talks about how she found a new approach with a client who had fired several previous advisors.

I have a client who’s an older, married gentleman -- when you first meet him he seems like a grumpy-old-man type. In the early stages of our relationship when I was first getting to know him, he asked me to run a retirement projection for him. He hadn’t yet stopped working and he was anxious about doing so. I ran the numbers and told him that he was in great shape for retirement.

He didn’t seem to be able to absorb the good news, however. He kept asking me to run more and more dire what-if scenarios: What if he had a major health crisis? What if the market tanked 25% in a year? I kept running the scenarios while also providing him with charts and reports that underlined the idea that he was in great shape. I could tell, though, that all the reassurance I was offering just wasn’t getting through to him. Then he briefly stepped out of the room during one of our meetings, and his wife spoke up.

“You know, you’re the third financial planner he’s seen,” his wife confessed to me.

She told me that we’d all given him the same message that he was in great shape for retirement. But those previous two advisors hadn’t managed to convince him — and in the end, he’d fired both of them. I knew that if I wanted to make a difference for this client, I’d have to take a different tack.

Our next meeting was supposed to be a goal-setting meeting. I was nervous and unsure whether he’d be open to talking about his vision for the future. In fact, I expected him to be quite resistant. But what happened in that meeting shocked me.

I asked one of my typical questions: If you knew you had only 24 hours to live, what would you regret? He immediately burst into tears. In the subsequent conversation, he revealed that he had grown up very poor. It was clear to me that he’d internalized this fear of lacking sufficient resources, and that this was the reason why he was so uncomfortable with the idea of retiring. But I had to find a way to help him understand that, too.

After that goal-setting meeting I asked him to complete a money personality quiz. This is something I do with clients who seem to have some sort of internal block — maybe they overspend or maybe, like this client, they tend to underspend.

The quiz diagnosed my client as “a miser.” At the next meeting we were able to use that label to talk about why he was so hesitant about spending money. I don’t think it was something he’d ever discussed before in an in-depth way, even with his wife.

There was something about having me — a neutral third party — facilitating the conversation that enabled him to open up.Over time, even just having that label to point to helped him understand his behavior better.

Since that conversation, I feel as if we’ve finally broken through a psychological wall. He’s become more comfortable spending. He recently even booked a cruise with his wife. It’s been so satisfying to see someone who worked so hard throughout his life finally feel as though he has permission to enjoy himself.

You can make a client the best plan in the world and if they don’t implement it you’re just wasting their money and your time. Diagnostic tests like the money personality quiz can be really helpful when a client has an issue about which they have a hard time being open.

By providing a label and a frame for discussing the issues, such tools allow you to have a more productive conversation.

When you’re dealing with a situation where more reports aren’t doing any good, you need to take a different approach.