You open your emails, but still no response. You check your voicemail messages… nothing. You can’t get your head around it.
Two weeks ago, a potential client contacted you. They had recently celebrated their 50th birthday and had been thinking about the future. They wanted to discuss their retirement plans to make sure they are managing their savings effectively in order to be financially independent when the time comes. You thought the meeting went well. You explained how you could help. You spoke about cashflow planning to gain clarity on their current financial situation and educated them on investing and how they could achieve greater returns on their cash savings. You were pleased that the two of you seemed to build such strong rapport and you were excited to work with them. What’s more, you saw a real opportunity to add value; it was a no-brainer. But two weeks after they left the office with your marketing materials in hand and an agreement to return to sign the necessary agreements, you still haven’t heard back from them.
Sound familiar? This is not an uncommon situation.
When a prospective client agrees to meet with a financial adviser, this is likely the result of a considered and rational thought process. But a range of emotions are also at play. An individual’s decision to engage in ‘help-seeking behaviour’ has been well researched – particularly in the context of seeking medical advice or therapy. More recently though, research has explored help-seeking behaviour specifically relating to financial advice.
The advice-seeking process
In an academic paper titled, “A Further Examination of Financial Help-Seeking Behavior”, the authors, John Grable and So-Hyun Joo, adapted a five-step help-seeking process previously used in other fields to summarise an individual’s financial advice-seeking journey. Let’s examine this process in relation to the example prospect above.
Before seeking external support, the prospective client;
- Step 1: Exhibits financial behaviours.
This likely involved making regular bank savings – perhaps a set amount of their income – to put aside for the future. They may not have paid too much attention to the interest rate received or their total asset value whilst doing so.
- Step 2: Evaluates these behaviours
Perhaps prompted by conversations with family or friends, they reflect on their long-term financial situation and identify that they are unclear about how well they might be set for retirement. Although their savings behaviours are generally positive, they lack comfort around how they are positioned for the future, and they may feel that they are missing opportunities to enhance their wealth.
- Step 3: Seeks to identify the causes
They may put this discomfort and the missed opportunities down to a gap in their own financial knowledge. Alternatively, they may attribute their financial opacity to their lack of time to pay attention to personal financial matters.
- Step 4: Decides whether to seek help
The steps above lead the individual to establish that they need the support of a third party – in some shape or form.
- Step 5: Chooses between help provider alternatives
Although this support could come in the form of informal advice from family, friends, or using online resources, they consider that due to the importance of the issue and their own constraints, the help of a professional adviser would be most appropriate.
This process usefully captures our individual’s key decision-making milestones. It would be easy to comprehend this as a purely rational and objective process. However, although this process can describe the actions they may have taken leading up to meeting with an adviser, it doesn’t explain their behaviour since. To better understand the dynamics at play, we should consider an important emotional influence that the individual is subjected to in the latter stages of this process; financial adviser anxiety.
Understand the emotional influences
Financial adviser anxiety relates to an individual’s emotions towards consulting with a professional adviser. Although an individual may realise that professional advice would be of economic value to them, financial adviser anxiety may still be a barrier to engaging in this process. Perhaps the easiest way to think of financial adviser anxiety is to consider our feelings about attending our doctor’s surgery to address a personal problem. We may expect the doctor’s advice to be valuable. The rational option is to book an appointment and have the problem addressed. But our emotions can interfere, and we don’t always take this approach. Adviser anxiety captures a similar concept and has been categorised into two areas;
Disclosure anxiety
This relates to one’s willingness to share information with a third party. It may relate to concerns about privacy or a lack of trust in the recipient of the information. In a study of 950 Dutch adults, 46.1% of respondents stated that they were reluctant to share their financial affairs with a financial adviser*. A high level of disclosure anxiety may lead a prospect to avoid help-seeking behaviour altogether, or perhaps choose an option that removes the need to disclose to a third party – such as deciding to take new steps to manage their own finances at Step 4 in the process above. Even when an individual has met with an adviser, such as in our scenario, disclosure anxiety may still resurface when that individual is at the point of formal engagement. This can hinder best-laid plans to seek advice.
Evaluation anxiety
The second aspect of financial adviser anxiety focuses on the actual interaction with an adviser and specifically, how that adviser might judge them on hearing details of their financial matters. During an interview I held with an affluent individual who was receiving advice, they described their lack of knowledge of investment markets as, “a terrible confession”, that they didn’t want their adviser to know the extent of. This may seem counter-intuitive. After all, the adviser’s role is to help his or her client improve their financial situation, and surely this involves an expectation that the client has exhibited behaviours or made decisions that could be improved upon. Yet if we return to the analogy of the medical professional above, we have likely experienced this concern of external judgement ourselves when we know we should have sought medical help sooner or should have avoided self-treatment of an issue.
An individual who has high financial adviser anxiety may follow the first three steps the help-seeking process above and establish that they would benefit from advice. They may even attend an initial meeting with a financial adviser to clarify their needs. But if strong underlying emotions are at play, which conflict with their ‘rational’ views, these emotions can often prevail. As in the example given in this article, prospective clients may take the common approach to addressing financial adviser anxiety and ultimately avoid professional advice.
Financial adviser anxiety is a common issue that should be acknowledged and understood. The benefits of doing so go beyond effectively managing prospect interactions. By appreciating the complex emotions that can influence financial behaviours, advisers can better serve their clients to take actions that are in their best interests.
*Source: “Why do older adults avoid seeking financial advice? Adviser anxiety in the Netherlands”, Hendrik Van Dalen, Kène Henkens and Douglas Hershey, 2016