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6 Ways to Help Clients Face Financial Fears


Having a client's trust is crucial to helping them address financial fears, especially when discussing expenses for retiring clients. In this article, Bryce Sanders offers six strategies for getting client "buy in" to make these discussions go more smoothly and motivate your client to start their financial plan.

5th Apr 2022
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The accounting and medical professions are similar in that practitioners in both need a good “bedside manner.” They need to gain the trust and support of their patient or client. In accounting, this is especially true when trying to get clients to discuss their financial fears, particularly when they think there is no solution.

Just as a doctor has data to show them whether a patient has been following their advice,  accountants can see from data whether their clients are saving money for retirement; if so, the balances in their retirement accounts should be increasing!

Six Ways to Get Client “Buy In” When Addressing Financial Fears

You might think “tough love” or “scared straight” would be good strategies; however, they may convince the client the situation is hopeless or beyond repair. You need a different strategy to get clients to embrace the solution and confront their fears.

The Monte Carlo analysis. With this financial planning tool, an abundant amount of data is gathered, including how much the client has saved, how the money is invested, how much they intend to save moving forward and the lifestyle they expect to maintain in retirement. Inflation is factored in, along with other assumptions like health care costs. 

Strategy: This approach is useful for defining the problem. Ask your clients questions such as, “How do you envision your retirement lifestyle?” and then “How confident are you that you can achieve it?” You are looking for a percentage as their answer. By running the analysis, you can compare their assumed percentage of success with a more accurate estimate. They often discover their money will likely run out while they are still around. Now that you have established there is a problem, they should be open to solutions to address the issue.

The value of encouragement. Have you heard the expression, “It’s evolution, not revolution”? Big lifestyle changes are difficult to sustain over long periods of time. If you have dieted, you know it’s easier to follow the program when you are eating at home alone versus going out to dinner with friends.

Strategy: You have helped your client develop a budget. They need to spend less and save more. They need to reduce their outstanding credit card debt. Celebrate small successes as you check in regularly. Tell them they are making progress as you review the numbers. Most people respond positively to praise. If you offer encouragement, they will work even harder before the next review session.   

Discuss the tradeoffs between risk and reward. Parents tell their children you cannot have your cake and eat it, too. Some don’t apply the same logic in their own lives. They might insist on taking no risk and having constant liquidity in their retirement savings, even when interest rates are close to zero. They would need to save an extraordinary amount of money to meet their retirement goals. They need a higher return but must accept some uncertainly and compromises.

Strategy: The stock market has delivered extraordinary returns, often averaging 10 percent when measured over decades. If a client doesn’t need to access their money for several decades, they shouldn’t be paying a price for liquidity they probably won’t need. This returns you to the Monte Carlo analysis where you consider a different asset allocation and project returns. One of the advantages of the analysis is being able to look at best, worse and average case scenarios.  They need to understand future results are uncertain, regardless of how good past performance has been.

Offer different solutions. Your client might be facing a shortfall in retirement savings. They consider the problem unsurmountable. There is no solution. They are prepared to ignore the problem or push it off into the future. That’s because they think they have no alternatives.

Strategy: As their accountant and financial planning expert, you see the big picture. They could delay their retirement to a later age. Their Social Security payment grows bigger if they delay collecting. They have more years to contribute to their retirement savings. Their assets have more time to grow. Another approach might be to keep the same retirement date but save more in the meantime. This might mean local vacations instead of overseas holidays. It may mean cutting back on expenses. This frees up more money for retirement savings. Another solution is to scale back their anticipated lifestyle in retirement. If they can see themselves spending less, their money will last longer. You have moved from a problem with no solution to a problem with several possible options.

Think outside the box. Traditional retirement planning looks at growth of financial assets, then depletion of those assets as they get spent over time. Few of your clients live in a rental apartment and have only financial assets. Many clients own a home, possibly more than one. They might own rental property too. They may have fully paid-up life insurance policies suitable for a 1035 exchange into an annuity. They may receive an inheritance sometime in the future. Look at the big picture.

Strategy: Your client may feel they cannot maintain their lifestyle in retirement. This may be true if they live in New Jersey, the state with the highest property taxes in the nation, or New York or Hawaii, with the highest cost of living. Suppose they downsized or moved to another state when they retire? This may put their retirement goal within reach.

Financial independence. Your young client sees retirement as something in the distant future, not a current concern. They are young and want to enjoy life. They spend what they make. Accumulating assets doesn’t seem important to them. They assume they will have a well-paying job forever.

Strategy: Retirement may seem a long way off. Consider positioning it as financial independence. Would your client like to get to the point where working is a choice, not a requirement? Would they like to someday be able to leave the corporate world and start their own business or pursue their passion and become an artist? Suddenly the far-off goal of retirement becomes the goal of financial independence. They may be motivated to work hard to make that happen.

There are many ways you can create a sense of urgency in your clients’ lives and motivate them to find and implement a solution. You are an integral part of that solution.

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