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Nudging the Reluctant Client

Persistence pays off when dealing with clients involved in major life changes.

David J. Drucker, 01/28/2010

To live is to experience loss.

We endure all kinds of losses--large and small--during our lifetimes. As we age, though, the losses tend to be greater. The deaths of friends and family members are high on the list of losses, but other losses occur, and they are often minimized when, in fact, they pose just as big an issue.

A client who reaches an age so advanced that he can no longer drive a car experiences a tremendous loss of freedom. A client who can no longer care for herself and now requires assistance with functions of daily living experiences an even greater loss of her home and familiar surroundings as family members move her to assisted living.

Because the emotional and monetary aspects of these life changes are so intertwined, financial advisors get caught in the middle. It's up to us, as full-service providers, to assist clients in making these life changes while we are, at the same time, aware of the personal loss that these changes engender.

Pat Raskob of Raskob/Kambourian Financial Advisors in Tucson, Ariz., deals with these themes all the time. She calls this phenomenon the "psychology of getting clients to give up control as they age."

With an 11-person firm often specializing in planning for the aged (they even have a couple of clients who have made it to 100), Raskob said that the firm "didn't start out targeting seniors. We worked with pre-retirement clients and, over time, they've became senior clients."

"We've all heard the horror stories about estate-planning failures by prominent persons like Howard Hughes and Jackie Onassis," Raskob said, adding that she will sometimes relate these to clients to stress the importance of taking some kind of action on major life changes before it's too late.

One new client told Raskob that the client's estate planning had been done recently, and Raskob found, when she checked, that the client's estate plan dated back to 1981. She told the client that changes were needed, and now Raskob reviews the estate plan--and those of all her clients--once a year.

Increasing clients' awareness of the traps that inaction can bring leads to the next step: asking every client, "In case something happens to you beyond your control, like a fall or an accident, who would you want us (your financial advisory firm) to talk to?" The firm gets every client's attorney's or family members' names . whomever has the client's power of attorney, Raskob said. She does this for all clients, even the younger ones, particularly if they're single.

Taking care of clients to this degree helps earn trust that the firm can use to facilitate upcoming changes. Raskob gave an example of one client (now deceased) who was having a vision problem that caused her to have three auto accidents in a year. It was clear she had to give up driving and perhaps hire a driver.

"Of course, she didn't want to give up her independence," Raskob said. "And she was reluctant to hire a driver." Raskob tried, through the family, to get the client's doctor or lawyer to talk to her, but they declined. Finally, while speaking with a family member, Raskob thought of talking to the client's insurance agent. "So I chatted with the agent one day, asked about the cost of a driver, and requested he talk with the client." The agent, with his knowledge of the problem and the solution, was able to convince the client--at Raskob's behest--that she change her approach to driving.
Raskob--like so many advisors--also had a client who needed to leave her home in search of better care. "We helped her put her house on the market, sell it, and move into an independent-living facility." Over the following nine months, though, the client started falling and exhibiting other health issues. "She had no close relatives nearby so I talked to her attorney and we convinced her just in time to move into assisted living."

But it wasn't automatic, Raskob said. The client was reluctant to move again, so Raskob asked her to look at the facility with her, because the visit might be helpful to some of Raskob's other clients. "This client liked the facility so we put her name on the waiting list and she eventually went into assisted living for six to eight months." At that point, the client needed to go into a special Alzheimer's wing and, after securing power of attorney from a New York relative, Raskob was able to place her there.

The point is this: Sometimes Raskob--and all advisors --have more contact with older clients than even their family members. We see the changes taking place in their ability to care for themselves and their need for alternate caregivers. With hard work, advisors can help those clients make critical life decisions.

The move to a continuing-care community is a big step for all older clients and a notoriously difficult one for some. Raskob told the story of another client who was hesitant to commit to a new living arrangement, so she asked the client's daughter what her mother liked to do. Crafts, the daughter said. Raskob suggested to the daughter that she ask the administrator at the facility in question about craft classes and, of course, the facility had them.

The daughter took her mother to visit the facility under the pretense of "just checking it out for herself." They had lunch there and, afterward, showed mom what the residents like to do--and there were the crafts. The mother started asking questions about the craft work and got involved in one of the classes. "About three days later, the client told her daughter she wanted to revisit the facility and maybe even live there," Raskob said.

The key to nudging clients, Raskob said, is persistence and patience. Also, during her college years, Raskob said that she needed an elective course and discovered general psychology. "I enjoyed it so much that I got a degree in business and one in psychology. At the time, I thought it was just interesting and fun. Now when I talk to young people I always recommend taking some psychology courses to get a sense of how people respond and react in situations like those she's had to deal with. "A CFP with a psychology background is the perfect mix for this job," she said.

The ultimate key, though, is to be nonthreatening in encouraging people to make up their own minds. "You can't say, 'you have to change,'" Raskob said. "You have to help them come to the decision on their own."

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