Shifting a Money Mindset: Questions Advisors Should Ask Clients

A money mindset refers to the beliefs and attitudes that investors hold about money and their ability to manage it. It isn’t solely determined by income, but also by a client’s financial beliefs and confidence.

By examining and editing these beliefs, individuals can improve their financial health and quality of life.

Language and mindset play a significant role in financial planning and decision-making.

To productively onboard clients, advisors need to diagnose and understand a client’s mindset. A future-oriented and abstract mindset can lead to greater goal motivation and self-control in financial planning.

Here's where to start.

It’s important to recognize that money isn’t just a numerical concept for your clients, but is connected to their identity and aspirations.

A positive money mindset could include beliefs like:

• Money is a way to make sure I can take care of others, such as my family, friends, or pets.
• Money allows me to enjoy life and strive for fun and fulfilling things.
• Money is essential in our society.
• Money helps me meet my basic needs and pay for necessities.
• Money gives me the security and freedom I need.
• Having enough money allows me to save it for the future.

On the opposite end of the spectrum is the scarcity mindset. The scarcity mindset is defined as having less than you feel you need, which can affect our behaviors negatively.

A scarcity mindset can lead to tunneling, or a singular, obsessive focus on the lacking resource. This can lead to regrettable decisions like taking out high-interest loans or saving less.

Unsurprisingly, positive emotions have been linked to features like open-mindedness and receptiveness.

Guiding prospective clients to a positive state of mind can start a good conversation—and create a stronger foundation.

Although every prospective client is different, Morningstar researchers found that the question “What is important about money to you?” can positively impact the mindset of investors more than the question “Why is money important to you?”

Here’s a look at advantages to posing the “What” question.

The ability of prospective clients to look ahead is important. Those who were asked the “What” question reported thinking more about future money concerns and used future-oriented vocabulary like “later” and “retirement.” In comparison, the “Why” question elicited responses with here-and-now vocabulary like “tomorrow” and “every day.”

Having a future-focused mindset may prove beneficial: Existing research associates this trait with greater self-control, which can help clients achieve long-term financial goals.

Abstract thinking may be another promising advantage. When asked the “What” question, prospective clients provided more responses about general ideas. While this group used abstract vocabulary like “peace” and “value,” those who were asked the “Why” question chose concrete vocabulary like “house” and food.”

This skill can indicate greater goal motivation—a major factor for successful financial planning.

There are plenty of possible questions that can help advisors understand why money is important to prospective clients. While our study found the “What” question to show more advantage, our results don’t support a one-size-fits-all approach.

No matter what question you decide to use, it’s critical to recognize the money mindset of your prospective client. To truly provide support, you need to be an active listener and create a space for investors to clearly articulate their goals and preferences.

Asking engaging questions may set the tone for what comes next and encourage investors to be more thoughtful about their financial goals.

Starting a productive conversation might be challenging. Through asking your prospective clients the right questions, you may better understand their motivations and guide them to a positive money mindset.

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