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Moira Somers: How to Give Financial Advice That People Will Actually Take

A neuropsychologist discusses why clients don't do what their financial advisors tell them to do--and how advisors can improve upon that.

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Our guest on the podcast today is Dr. Moira Somers, a clinical neuropsychologist and professor. She’s also author of the book Advice That Sticks: How to Give Financial Advice That People Will Follow, published in 2018. Dr Somers’ expertise is in brain functioning, behavior change, and mental health, topics that she often discusses in the context of financial advice. She’s a frequent public speaker and also consults with advisors on improving their client outcomes. 

Dr. Somers is a senior faculty member with the Sudden Money Institute, where she trains advisors and conducts research into the psychological factors at play during major life transitions. 

Background
Moira Somers' biography 

Moira Somers' website 

Somers, M. 2018. Advice That Sticks: How to Give Financial Advice That People Will Follow (London: Practical Inspiration Publishing).

Improving Client Adherence
Behavioral finance definition 

Martin, L., Williams, S.L., Haskard, K.B., et al. 2005. “The Challenge of Patient Adherence.” Therapeutics and Clinical Risk Management, Vol. 1, No. 3, P. 189. 

Somers, M. “Does Your Advice Stick?Journal of Financial Planning, May 2018.

Stone, G.C. 1979. “Patient Compliance and the Role of the Expert.” Journal of Social Issues, Winter. 

Financial Jargon Your Advisor May Throw at You,” CNBC.com, Oct. 8, 2012. 

Beerens, M. 2019. Listening, Empathy and Personal Attention Go A Long Way in Client Acquisition and Retention.” Investors Business Daily, Nov. 4, 2019. 

Lee, B.Y. 2018. “11 Seconds: How Long Your Doctor Waits Before Interrupting You." Forbes.com, July 22, 2018. 

Jung, D. 2019. “Nudge Action: Overcoming Decision Inertia in Financial Planning Tools.” BehavioralEconomics.com, March 12, 2019.

Benartzi, S. 2017. How Digital Tools and Behavioral Economics Will Save Retirement.” Harvard Business Review, Dec. 7, 2017.

Raihani, N. 2013. Nudge Politics: Efficacy and Ethics.” Frontiers in Psychology, Vol. 4, P. 972. 

Eisenberg, R. 2013. To Solve the U.S. Retirement Crisis, Look to Australia,” Forbes.com, Aug. 19, 2013. 

Frankenfield, J. 2019. What Is a Robo-Advisor?Investopedia.com, Oct. 1, 2019. 

Knudge.com 

Touchstone Pathway 

Gamification definition 

Kahneman, D. 2011. Thinking, Fast and Slow.

Transcript

Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance for Morningstar, Inc.

Jeff Ptak: And I'm Jeff Ptak, global director of manager research for Morningstar Research Services. I'll be joining the conversation remotely from London this week.

Benz: Our guest on the podcast today is Dr. Moira Somers, a clinical neuropsychologist and professor. She's also author of the book "Advice That Sticks: How to Give Financial Advice that People Will Follow" published in 2018. Dr. Somers' expertise is in brain functioning, behavior change and mental health, topics that she often discusses in the context of financial advice. She's a frequent public speaker and also consults with advisors on improving their client outcomes. Dr. Somers is a senior faculty member with the Sudden Money Institute where she trains advisors and conducts research into the psychological factors that play during major life transitions. We're thrilled to have her here with us today.

Dr. Somers, welcome to The Long View.

Dr. Moira Somers: Thank you so much. Looking forward to speaking with you both.

Benz: Well, we're looking forward to speaking with you, too. We're thrilled to have you here. When we interviewed Michael Kitces for this podcast a few months ago, one thing that we talked about is how behavioral finance discussions often begin and end with this sort of, "people do the stupidest things with money" conversation. So, I guess, the starting question is, do you think the financial services industry is disproportionately hung up on discussing what people get wrong and they don't spend enough time talking about how to fix it?

Somers: I do think that there is a pervasive kind of judgmentalness that sometimes comes out of behavioral finance discussions. And that's unfortunate because one of the things that drives people away from working with financial professionals is the fact that they often leave those meetings feeling stupid. And so, I think we have to kind of ferret out judgment to wherever we can so that we provide a much more welcoming space to celebrate what people do well and to build on those strengths and, where possible, to be working behind the scenes to prevent the kinds of problems that are preventable at the behind-the-scenes level.

Benz: So, a lot of your work has focused on helping advisors help their clients actually enact the changes that they're recommending. Let's talk about some of the research that's been done in the healthcare space because you actually think that a lot of that research legitimately could be useful to financial advisors looking to figure out why their clients don't implement the suggestions that they make. Let's talk about what the healthcare research says about noncompliant patients who don't lose weight or don't take their drugs or whatever the recommendation might be.

Somers: There has been a real sea change in healthcare, trying to get practitioners to move away from what has been a very favorite past time of patient-bashing into a more curious and nuanced and helpful look at where do things go wrong? There's an old expression: "there's many a slip twixt the cup and the lip." And what that means to me is that we have to look at the various factors involved in any kind of behavior change. And one of the best place for advisors to look is at themselves. Within the healthcare domain, we know that one of the best places for people working with patients to look, is at the healthcare providers themselves. There are a few predictable mistakes that professionals in any help-giving profession make that just need to be addressed.

Ptak: What are some examples of those mistakes?

Somers: The biggest one, and I think it's the one that is most easily corrected with a little bit of intentionality, is the tendency to use jargon. We really overestimate the level of knowledge of the people that we serve. Even using analogies like in the black or in the red—those are not well understood. And when you use things that are kind of in language for the “in group,” you end up leaving people on the outside wondering what the heck did you just say or what did you mean by that? And so, one of the strategies that I often ask advisors to employ is to take anything that they might mail out to their clients and have a sampling of their clients go through it with a highlighter and highlight anything that they don't understand. And what I have been told 100% of the time without exception is that the advisors have just been stunned by how much highlighting there is.

Benz: Another finding that you have talked about is the importance of listening, which I guess should be obvious to any of us in any field. But let's talk about that with respect to advisors. How your view is that if advisors want to have a productive relationship with their clients, that being willing to listen and being willing to cede the floor to their clients is absolutely crucial?

Somers: Absolutely. We know that one of the best predictors of satisfaction in a meeting is how much airtime the client gets. So, even just at that level, the more you cede the floor, the more airtime you give to the clients, the happier they will be in that meeting in statistical terms. But in terms of what that gives to the advisor is obviously a much more nuanced understanding of the client's life. This is a concern that we see across the wealth spectrum, that clients feel that their advisors don't really understand their values and their goals, and they don't understand how the advisors' plan for them is really acting in accordance with those goals. It's kind of like going to a makeup counter where they have you fill out, you know, "What kind of look are you going for and what kind of problems does your skin have?" And then, having them just completely disregard that information and give you something caustic that has you looking like a clown. That's sometimes the experience that people have in coming out of meetings with professionals of every stripe. And we have to get better. If we're going to ask for information about them ahead of time, we really need to honor that by incorporating that into our work with folks.

Ptak: So, is that something that you workshop with advisors that engage you? For instance, let's kind of pretend that we're having a first meeting with the prospect, you, advisor, how would you approach this? Like, how do you advise that advisor to approach that first conversation to promote active listening? Forgive the term, but to promote good listening?

Somers: Yes, Jeff, by doing many of those things, by sitting there and actually workshopping it, by timing, how long does it take you to interrupt on average? It takes the average physician less than 18 seconds to interrupt the average patient. And that's after years of explicit training to not do that. And so, you can imagine how far behind advisors are. Because even at this point, to become a certified financial professional, you still don't need to have any courses in communication.

So, some of the stuff is pretty basic. How to ask those open-ended questions you referenced earlier? This is a much more advanced kind of experience, but how to understand what triggers you, what's going on internally in terms of your judgment, how disdain, how empathy get triggered in you, how both of those can be helpful or harmful, you know, the whole gamut. So, some of that is very advanced. Some of it is very basic. A basic course in communication, in listening is, I think, critical for any helping profession.

Benz: One thing that you've said is that you think that a good opening salvo for any meeting is to say to the other party, "What are you hoping to get out of this?" Let's talk about that.

Somers: Agenda-setting is really crucial. I know that advisors and healthcare professionals alike often have certain agenda items that they absolutely need to get through in the course of a meeting if things are going to move ahead from their point of view. But sometimes that can override very real, very pressing current concerns that the client has. And so, to be able to ask at the outset of every meeting, "What is it that you're hoping to get out of this today, and do we have time to get to these other things?" We're all better off having slightly longer initial meetings in order to cover these things and in order to get to whether or not the client is in agreement and has any intention of following through with them. Better off to extend those initial meetings than to just rush in and assume that you know what the patient or the client wants, and that you assume that the client is indeed willing to implement what you've proposed.

Benz: So, are advisors averse to hearing this message that even though they've been hired as the expert in the relationship that maybe their best course of action at certain points in time is just to shut up and listen?

Somers: They are averse to that I have to say, although the longer they are in the profession and the more that they understand that financial advising has both technical requirements that absolutely need to be upheld, but that it also has personal requirements, then the more committed I find that they are to developing the personal side of their expertise. Most decisions are emotional. And it's important that we understand what are the drivers of clients' actions? What can't they tell us comfortably? Where have they tried similar things in the past and failed? If you don't know how to get at, in some ways, at some of the more tender aspects of people's hopes and wishes, then you're going to be missing the mark. And as soon as the feathers of life hit the fan for those clients, they are going to be voting with their feet and finding an advisor who can offer them something more than just the technical.

Ptak: So, when advisors do push back, how do you convince them? Do you point to empirical research that you or others in the profession have conducted? Are there other things that are maybe more anecdotal that you would point them to such as, you know, durability of relationships that others who have formed these habits have been able to enter into?

Somers: One of the things that I often have advisors do is simply list the last five clients that have entered their book of business, and the most recent clients that they've lost. And we look at how many of those clients are people who are undergoing or who have just passed through a major life transition. The research shows that transitions are really what drive advisors' businesses. Most new clients come to advisors during times of major life transitions. That's the great news. The bad news is that it's also when most clients will choose to exit their existing advisors' book of business.

And we know that that's because they lose faith that the advisor who worked with the old them— the them before this big event that they're facing—they lose faith that the advisor has the skills to work with the new them. The literature on widowhood, for example, is pretty clear on this. The majority of widows leave the advisor that used to work with them as a couple within two years of widowhood. And sometimes that's because of geographical relocation and that kind of thing, but often it's because they just do not care for how that advisor has dealt with them historically. There's nothing to be lost by gaining personal skills and there's a whole lot to be gained.

Benz: Let's talk about the major life changes because some of your research has been in that area. It sounds like people frequently change advisors after major life changes. What else do we see in terms of behaviors and being receptive to getting guidance at that life stage.

Somers: You know, sometimes you think you know what the clients' emotional experiences going to be after, or in anticipation of, a life event. And one of the things that I've had to learn is that I really can't assume those things. I can't assume that divorce or widowhood are devastating. I can't assume that the promotion or the business sale or the anticipated retirement, that those things are being viewed with welcome and positivity. So, the first thing that the transition research is teaching us is that this all goes through very personal filters. And we need to figure out what is the experience of the person who is right in front of us.

The second thing that comes to mind is that especially in later adulthood, a lot of transition events tend to kind of gang up on people almost like a pileup on a freeway. So that you might have somebody who's been anticipating retirement only to very quickly and unexpectedly be faced with a major illness in themselves or their partner. And then, maybe they're looking at widowhood, and then maybe they're looking at relocation. And so, when those events pile up, they really do tend to take a toll on people. And positive or negative, when you go through these big life changes, frequently they deplete us. And we don't always have access to our best thinking when we are depleted. We tend to have decision-making difficulty, for example. So, when an advisor is asking us to make decisions with long-term implications at a time when we haven't even found our feet yet, that's the time that regrettable decisions can be made. So, that's a really high-level overview of what some of the research tells us.

Benz: A lot of your research has focused on why people don't implement advisor recommendations and it sounds like communication or interpersonal issues have a lot to do with that. What other factors are in play? Inertia; what are some of the other forces that the advisor is battling?

Somers: Sometimes the social contributors to financial progress or financial torpedoing have to be looked at. So those can range from you know who exactly is in the client's social realm; who's influencing this person? One really common thing that comes into my office right now, a common scenario is somebody who's facing retirement but whose income is still being required to support adult children at levels that are so high that they can't really move ahead with their retirement plans. So, who is in the client's life that would make saving, investing, spending decisions more complicated or more nuanced, perhaps than the advisor is aware of?

Benz: How does an advisor deal with that?

Somers: Absolutely by saying, you know, before the clients leave the office, the advisors need to say, "Are you in agreement with this course of action?" Three questions that I try to get advisors to ask and these do come directly out of the medical adherence, "Is this the right thing for us to be doing?" In other words, "Have I addressed the issue that's a greatest concern to you?" That's question one. Question two is, "If you were to do this thing, how would it benefit you? In other words, what is the client's motivation to be doing something? And if you're asking them to do a really hard thing, like, get an estate plan put together, which is something that about 60% to 75% of the population do not have up-to-date wills or any wills. So, if you say, you know, "Would you go get that estate plan in place?" And the client really isn't strongly motivated to do that, you are going to get nothing back. So, you need to try and find—help the client find—his or her own motivation for why they would persist with that and what they would do if the motivation flags.

And then, the third question is, "If you were to decide to go ahead with this, what do you think might get in the way, so that you really look at things like is there anybody who would object to this? Have you ever tried something like this before? Who do you know who might be supportive of this? And would you like to be in touch with them to get their support? Is there anything that I can be doing to support you in this?" I just did a couple of presentations on why people have such difficulty getting their wills done or putting estate plans in place. And one thing that's come up is the absence of defaults or nudges. This is coming from the field of behavioral economics. The absence of helpful defaults or nudges to get estate planning done. And there are so many opportunities that we could be putting in place as a society to nudge people in the right direction. But we haven't done that yet.

Benz: What would be an example? Like, if you have a baby, they say, "Have you thought about having a will or something like that?"

Somers: Absolutely, so that when you register the birth with the state or the province or the county, however, it works in your jurisdiction, that what you get back is even a boilerplate, sort of, here's a basic will. Or that the advisors use some just-in-time nudges. You know, this is coming out of some of Morningstar's research on financial literacy. When are these things best put out? Well, those nudges and educational materials are best received when the client is in a position to understand the emotional impact of that work or the practical impact of doing such a thing on their life. But when you have a newborn baby in your arms, you do tend to get in touch pretty quickly with the frailty of life and how important it is to take care of the people you love. But other just-in-time nudges, Christine, could include when you register your marriage license or when you onboard with HR. HR could say, again, here's a boilerplate or we have two different seminars on wills or here we give you a $50 or a $200 voucher. This is something that one of the charities that I work with has been doing consistently. If you come back with a signed will, we will donate $200 to the charity of your choice. So, there's some really creative things being done out there. And I think we do have to engage our creativity and our curiosity often when trying to nudge people in the direction of healthy financial behaviors.

Ptak: But sometimes the event or the transition won't have the same sort of emotional resonance of thinking of things as mundane as saving early in your career. The life event is maybe you start your career, and now you have a paycheck and so, you can start compounding that to your advantage over time. And the nudge that we've typically seen there is someone gets auto-enrolled into a defined-contribution plan. So, in a sense, it's automated and enforced. And so, do you find for those types of transitions, which maybe don't have the same sort of emotional resonance, that you need to use those sorts of nudges, which are maybe a little bit more paternalistic in some ways, but they work?

Somers: Yes, I know that there's been a lot of concern about just how paternalistic are they. I don't have strong feelings about it. I just know that the data are unequivocal about how changing up the default, which still gives people 100% choice, changing up a default can be so powerful in creating better lives for folks. And so, I don't—as long as you're not removing choice, I think we do need to be looking at how to make things work better than they have been working. Poverty is frequently avoidable in retirement. So, it would have been avoidable if people had been helped to save more than they have. And the more that we can intervene in a timely manner to do that kind of thing, the better. There are some countries that have really taken this on a big way. Australia, for example, has mandatory retirement savings. And I think the data coming back there is that it's really helped raise people's standard of living in retirement in ways that are greatly appreciated by the folks once they get there.

It doesn't mean that's all there is to do. Of course, we may need to be looking at other ways of helping people to earn more. There are other societal interventions that would be helpful, but I think we need to look at what we already know works so well.

Benz: To go back to the advisor's role in this—you have talked about how kind of deconstructing a task like creating an estate plan into smaller bite-sized chunks can be a really effective way to get people to actually take the steps to implement what the advisor is telling them to do. Let's talk about that.

Somers: Well, one of the things that—you asked earlier Christine about what makes advice more likely to be adhered to. And so, I've talked about some of the things that advisors can do with respect to their own language level. We've talked about characteristics of the clients. So, for example, knowing whether or not they're in transition, and asking those readiness questions of them, so that you know whether, in fact, they have the bandwidth to do things.

A third domain that it's important for us to look at is the nature of the advice itself. So, there's some advice that is inherently easier to follow than others. Easy-to-follow advice is single step. It doesn't hurt. It comes as a solution to a current pain point. It's monitored or supervised. It's culturally common or it's not at least visibly different. Those are some of the qualities of advice that's easy to implement. But when you think of something like, "Let's revamp your overspending, under-saving issue, or let's take a look at an estate plan," often the information just comes at the person out of a fire hose, and there's so many things that they're supposed to do. And in an attempt to be efficient sometimes, I think, financial professionals will just give people a guide. I downloaded a few of the comprehensive estate-planning guides that Canadian banks give out to their customers, for example. Oh, my goodness, they were just overwhelmingly bad, because they were so laced with jargon, they were attempting to deal with people with really complex estate-planning needs, which is not the majority of the population. And, you know, I have a Ph.D. and I found some of the language to be very complex.

So, we certainly have an abundance of examples of how to do it badly. Let's take something like an overspending client, and maybe some of the folks on the call are working within credit-counseling agencies or financial-counseling programs of some sort. You can just unveil some really much more easily implemented steps like turn off one-click ordering. There's a little step that just introduces a helpful bit of what the behavioral economists call friction. There can be helpful friction or unhelpful friction. One-click ordering is a genius invention by online retailers to get us to part with our money much more automatically and unthinkingly. When we de-select that option, and we actually have to dig out the credit card from our wallet, sometimes just that little pause allows us to engage our long-term thinking. So, that would be an example of a tiny little behavior that you might start with the problem of overspending.

The next step might be: Sign up for online banking so that you can see where money goes. The next thing might be to take a look at all your automatic subscriptions and see whether those are still useful to you and desirable to you. And so, all of these little steps, it's not that you have to have one meeting for every step. You can just gamify this stuff even. So, as soon as people accomplish a step, they click off a box, a little congratulatory message comes back at them, and the next step is revealed. Those are some of the things that I have found really work in my own practice as a financial psychologist. And I'm seeing that there is widespread applicability of those for many other domains.

Ptak: I can see how breaking it up like you suggest makes it more manageable. But as I think we talked about earlier in the conversation, sometimes the client will just not follow through. So, the other piece of this is, you can deliver them those bite-sized pieces of good advice, how do you get them to actually motivate and do those things? I know that's not a very simple question, but I'm sure it's something that you've examined closely.

Somers: Well, absolutely. You need to make sure that the motivation is there before you assume that they'll follow up on it. That's the second part of that readiness assessment that I recommend we do with every single client every time we assign some advice. Are we in agreement that this is the right step? And if you were to do it, how would it benefit you? What does it mean if you don't do these things? But motivation is something that is notoriously fickle. It waxes and wanes, and so too even is memory fickle. We can actually forget our own best intentions for our lives, especially at the end of the day, when you don't even remember that you said that you were going to really cut down on your sodium, even as you're up to your elbow in the chip bag. You just sometimes forget that stuff. And so, we have to go back to the characteristics of the advice itself, Jeff. How are we following up with clients? How are we providing them with reminders? Because unsupervised, unmonitored advice is simply harder to take, and as a result, it is much less likely to be followed. And so, if you're going to assign something that people have to do on their own, you just have to know—you have to give yourself a head talk—that this is the kind of advice that might not get taken. And if there's anything that you can do to switch up advice, to move it from the hard-to-follow column on to the easy-to-follow column, you will end up with much more successful and satisfied clients as a result.

I wish it were different. I wish that it wasn't so. I wish that we could just give people a checklist of things to do and assume that it will get done. And every once in a while, like gamblers in a casino, we hit the three cherries on that item, and you get somebody who's super independent and super motivated. But those are more often than not the exception rather than the rule.

Benz: You mentioned the role of reminders and how they can be valuable. But how does an advisor, or whatever entity is pushing out the reminder, how do they kind of balance that against sort of the lack of desire to make someone feel guilty or bad about themselves if they're getting a lot of reminders?

Somers: Sure, sure. So, the last thing you want to do is be a nag.

Benz: Right.

Somers: Let me just bring you up in the balcony again and look at what does nonadherence mean and what are its roots. So, nonadherence simply is the failure to follow through with an agreed-upon plan. And so, there are a couple of assumptions in there, right, that first of all, the plan was indeed agreed upon. And many times, advisors skip that step. They just assume agreement, and they assume that the client is good to go when in fact they're not.

I think it's important, though, to not personalize it so much that there's a lot of nonadherence that is absolutely unintentional. People forget. Forgetting is the most common cause of unintentional adherence. So, if the advisor has reminder systems in place—you know, there's always a possibility, I suppose, that people could be snarky about that. And if they are, then you just apologize and say, “I won't send out those reminders anymore.” But many more people will say, "Ah, thanks. I needed that. I needed that nudge."

Benz: Do people feel less bad if the nudge comes in some sort of an electronic form like disembodied from an actual person who might be passing judgment?

Somers: I think they do. I think they do. Sometimes—and at a very, you know, if we were to go to maybe something that isn't quite so simple as just getting paperwork back in time from somebody who's very busy. But instead, maybe you're dealing with a bereaved client, or somebody who you know is the caregiver for somebody with a terminal illness, for example. There's so much emotional intelligence that has to go into that decision about how much follow-up is appropriate here. Would this be welcomed and appreciated or not? And there are no easy answers to that. Obviously, the better job you've done ahead of all of this in getting to know the clients and knowing how they like to receive communication from you, then the better off you'll be when those hard times hit. But it really can be tricky.

We do know, however, if I go back to the research, that clients get embarrassed by their lack of follow-through. Think about, you go to the dentist twice a year and they say, "So, have you been flossing?” Even as you're hemorrhaging from your gums. And you know, you just have to sort of mutter occasionally. But that's only somebody that you're in touch with every once in a while. If it's somebody like a personal trainer or a physiotherapist, and they say, "So, have you been doing these exercises?" And you haven't progressed in your weight-bearing ability in the past three months, chances are you'll drop out of personal training. And so, we kind of need to find the balance based on what kind of work is it that we personally do in terms of figuring out what's the right frequency? What are those just-in-time nudges and what kind of reminders are helpful? And how can I do my part in moving that difficult-to-follow advice into the easier-to-follow advice category?

Ptak: What about instilling accountability and ownership in a constructive way with the client, particularly at times of life transition where other family members might be pivotal to the success of whatever plan is being formed? I think you mentioned several times during the course of this conversation, the loss of a spouse and perhaps their dependence of the surviving spouse, who are part of the team so to speak, but really the person that we have to instill the accountability or ownership with is the surviving spouse. And so, does that become more complicated in those situations where you're bringing these other key members of the team, the dependents, as I mentioned, into the conversation, knowing that they're going to play a role in the success of the overall plan?

Somers: What is that expression, if you can't beat them…?

Benz: Join them.

Somers: Join them. There you go. If you can't beat them, join them. We know that people really wish they knew their elderly parents' advisors. We hear this all the time. And the research bears it out, especially for an elderly parent who might be living on his or her own and managing finances and the kids are far away. They really wish they knew that person's advisor. And they really wish they understood what kinds of plans have been put in place, if any, to help to safeguard this person from fraud or financial abuse or exploitation. And so, it's a really good idea for advisors to be engaging the next generation and not just with the frail elderly, but also, we know that generation-one wealth-builders as they are looking to put plans in place for transferring the wealth that those generation two and gen three frequently say that they don't know their parents' advisors, and they wish they did and they would be open to hearing from them.

So, I think there's a really clear invitation there to at least invite these folks into the room. There's an obvious business case to be made for that but there's also issues around just the fiduciary standard of care in terms of are you giving the right kind of advice at the right time given this person's circumstances, which include a clear understanding of what their social circumstances are and what their financial obligations or constraints or influences—what all of those are?

Benz: So, we've talked largely about human advisors. Would you say human advisors are inherently better at all these jobs than technology? Because technology is really moving quickly to step up and deliver financial advice. Can you talk about the limitations and the potential benefits of technology in all of this?

Somers: You know, I don't have huge expertise in this area. I wish there were more opportunities, and perhaps there are, to be looking at hybrid models. So, for example, it is time consuming to be providing nudges and reminders to clients. Whereas if those can be automated in the way that some robo-advice is automated, then that's a really lovely hybrid model. So, I think that there are ways that we can embrace the best of what technology and automation does and bring that into our own work.

Obviously, the more complex kinds of financial-planning cases and conversations can't be helped by a robo-advisor, neither can the drawing out of the personal side of the equation. There are lots of ways of putting questionnaires in place that find out what matters to this person—what are their values, what are their concerns? Whether or not that technology is sensitive enough to pivot to pick up on client distress, on changes in the client's life, on hyperexcitability, on cognitive failing, on all of those kinds of things. I would say that we're not anywhere near that point of rivaling what an excellent human advisor can offer.

Benz: Are there any technology solutions that you've seen that you find particularly promising, things that you say, "You know what, that really works,” from the standpoint of the research that you've done?"

Somers: I've seen some things emerging at the last XYPN Conference, for example, there was a really heartening number of fintech companies on display, providing some lovely examples of things. There was—I’m remembering one called Knudge with a K—that helps provide some of these just-in-time reminders for people. There was another fellow's technology that was one of the finalists in a competition last year—fellow's name was (Bob Boler). I'd have to look up the product name. But essentially, what these are, are software that makes sure that you're gathering the correct information for the behavior that you're trying to influence—whether that's the comprehensiveness of financial planning, or whether that's making sure that people are getting just-in-time reminders to attend to things that are relevant for them at that particular point in their lives. So, that's exciting for me to see that there are some software programs increasingly being made available to advisors.

I've also seen, Christine, some really neat things being done within individual advisory offices. There was one team that I was working with recently who had some folks on board really interested in the whole notion of gamifying. And so, they were the ones that were sending out these fun little congratulatory messages as we worked through some of the turning around of overspending problems or of getting estate-planning plans put in place. In one case, I saw somebody use the gamification approach, which really is about just providing timely feedback and showing how much work they've done. And then, towards the end, a little bit that still remains to be done. I was just so heartened to see how it turned around. In one case, 20 years' worth of deferred decisions got wrapped up inside of two months.

If you don't think those clients were grateful and are going to be clients for life, then I've got a thing or two to tell you. Because they were so thrilled. You know, people get frustrated with themselves when they don't act on their own best intentions and knowledge. And so, when there's a firm out there that can make it happen in a way that doesn't feel nagging, or paternalistic, but that actually manage to make it fun, and create momentum that became its own motivation and reward, that is just really wonderful stuff to see.

Benz: We've largely talked about how advisors can help clients do this, but we have a number of listeners who are do-it-yourself investors who like to oversee their own portfolios and their own plans. Let's talk about what they can take away from their research in terms of getting better at this, in terms of actually following through on things that they know all too well that they should be doing. Are there any hacks that they can take to heart when managing their plans?

Somers: I think the first thing is just acknowledging the power of unintended nonadherence. What systems do you need to put in place that would help you remember, that would give you just-in-time reminders? What kinds of friction would be helpful for you to add to your day, or to your investing decisions? So, if you're somebody who tends to be really impulsive, in buying and selling, and you're getting frustrated with yourself, you know that that hasn't worked for you in the past—how can you deliberately slow yourself down? Is there a chamber of sober second thought that you need to take that to? Is there a length of time that you could put in that where you would actually be locked out of making a change? Is there a reminder that will tell you it's time to sell or it's time to at least review this decision to sell?

So, again, automating, getting just-in-time nudges, telling the truth about your own propensities. And, what are they called, Odysseus interventions, you know, based on the notion of tying yourself to the mast so that you won't steer in the direction of the sirens and wreck your boat. How do you deliberately slow yourself down or prevent yourself from making dumb decisions? There are so many cognitive biases that have been identified, Christine. And as soon as you try to put something in place to address one bias, you tend to set yourself up for immediately falling prey to the next one.

And virtually, the only global recommendation that even somebody like Daniel Kahneman will come up with is, slow down. Take your time when making decisions. Make sure that you're consulting the right kind of information. And before making the decision, document what you've done, and come back to it afterwards to see—regardless of whether it turned out well or it didn't turn out well, because sometimes it's just probability and may not go your way for you at a given time. But if you've got a journal of how it is that you've typically made decisions and how they’ve turned out, you begin to accumulate your own database of what are your bugbears? And where do you typically get tripped up? And where do you repeatedly turn away from what you know to be true, or what you know to be prudent? And what might you like to do in response to that so that it's not just a matter of your own energy or your own willpower?

Ptak: You used the term “truth” a moment ago and I guess it triggered a question for me. We talked earlier about the importance of advisors being really open, attentive listeners. Do you think it's unfair for advisors to expect the clients that they're speaking to, to be unflinchingly honest and totally forthcoming about their situation and circumstances?

Somers: I don't know if “unfair” is the adjective. I might say, “unwise.” The fact is that we all cherry-pick what we're going to disclose. And that is frequently a function of trust. And so, I think it's fair to assume that as you earn trust that people would be more willing to entrust you with information that is more completely truthful. So, when we talk about disclosure of information, I mean, what are we talking about? Are we talking about the fact that they had to declare bankruptcy 15 years ago, and that remains a source of shame for them, and so, they don't want to tell you because it's not really germane to their current circumstance as far as they're concerned? That's one level of disclosure. Or the fact that they've got a whole other pile of money that is being managed currently by two other advisors because in fact they are test-driving people. That's another level of disclosure.

I think that the more we train ourselves to ask for the kind of information that we need, the more we become aware of our own assumptions and biases, and have people on our team who can correct those for us or ask different questions of clients, then the more likely we are to be eliciting more complete information from clients. But whether or not it's fair to assume it, I would just say it's unwise to assume that people will disclose entirely all at once, all the time. It may not even occur to them that you need something.

You know, when we're going back to the factors affecting adherence, we've talked about how there are some characteristics of advice that make it easier or harder in any domain that you might be working in. But let me tell you that one of the five factors that I address in my book about financial adherence is the domain of money itself. There are peculiar and particular challenges involved in giving financial advice that have to do with the fact that our relationship to money is one of the most long-standing relationships in our lives. It began to influence us long before we were born. And it will influence the quality of the scotch served at our wake or the coffin that we're laid in, and everything in between. It's so interwoven into our psyches—our beliefs about money, our experience with money. It influences where we live, where we go to school, who we will marry, whether or not that marriage will survive. It's so emotional a domain. And what that can lead to sometimes are these, especially if there's been financial abuse or trauma, it can lead to information gaps, where people don't even know that they don't know something.

I'm recalling a really powerful session I had with a couple that was trying to rein in some overspending. And they came into this session and she was really uncharacteristically quiet. At least that's what I thought until I realized partway through the session that she really wasn't even present that she was dissociative. She was responding, you know, with “ah-ha” and nods, but she wasn't cooking on all burners. And so, I had some time with her privately and found out about this traumatic financial history she had beginning from her very young days where she would witness her mom being beaten for expenditures that hadn't been cleared.

And so, just my unwitting triggering of some of that dynamic became clear to me because I had asked them to track their finances together. So, she wasn't being deliberately withholding of that information; she just had no idea how much of a bearing it had on her current-day functioning. And that's perhaps a more dramatic example. But it's not uncommon to have people coming into our offices with tremendous shame, tremendous regret, tremendous hopefulness, tremendous excitability, and our capacity to work with people in these various states of emotionality and these various states of cognitive depletion, or intactness, will greatly influence our success in working with them.

Benz: Well, Dr. Somers, this has been a fascinating discussion. We're so grateful for your willingness to share your perspective with us today.

Somers: Thank you. It's been a pleasure to talk with you.

Benz: Thank you so much.

Ptak: Thanks. Bye, bye.

Somers: Bye-bye.

Benz: Bye-bye. Thanks.

Thanks for joining us on The Long View. If you liked what you heard, please subscribe to and rate The Long View from Morningstar on iTunes, Google Play, Spotify, or wherever you get your podcasts. You can follow us on Twitter @Christine_Benz.

Ptak: And @SYOUTH1, which is, S-Y-O-U-T-H and the number 1.

Benz: Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)