Parting Shot continued from page 60
to spend these dollars on ourselves and not others . One example would be Shaquille O ’ Neal , who claimed to have spent several million dollars from one check in a single day on cars and jewelry .
Contrast that with “ surprise money ,” such as a large check from a relative on your birthday , gambling winnings or ( most commonly ) a tax refund . When these dollars hit our pockets , they can feel like an invitation to splurge . But you might also feel guilt and spend the money on others to relieve that feeling .
Finally , there is “ unhappy money ,” such as a life insurance settlement that reminds you of a loved one ’ s passing . We ’ re more likely to spend this on utilitarian or even virtuous purchases to dampen our negative feelings about a windfall , research shows .
With an understanding of a client ’ s psychology , it ’ s easier to come up with strategies to manage their stress and safeguard their well-being .
A Personalized Approach
Another concept , financial psychology , speaks to the ways a client ’ s relationship with money was shaped throughout their lives , as well as the ways that relationship influences their life and finances today . With an understanding of a client ’ s psychology , it ’ s easier to come up with strategies to manage their stress and safeguard their well-being . eMoney research shows that “ understanding their financial stress ” is important to most people and plays a strong role in personalizing the financial planning process . Having a firm grasp of financial psychology can help you lead a conversation with a client and find areas where they may need help .
As the quarterback of a client ’ s finances , you can also bring special teams into the relationship from outside — a therapist , for example .
Whether you serve athletes or other clients dealing with windfall money , or whether you merely aspire to serve them , a greater understanding of behavioral finance and financial psychology can help you further personalize your planning process .
EMILY KOOCHEL , PH . D ., is the head of financial wellness programs at eMoney Advisor .
Client Relations continued from page 28
symptoms — or are unwilling to see them .
When broached , the discussion should be calm and compassionate . You ’ re offering to help . “ Usually clients will be happy to have the support ,” Custis says .
Some firms have resources in place to help advisors with these conversations . Barbara Archer , a partner at Hightower Wealth Advisors in St . Louis , says her firm “ gives advisors access to articles , webinars , and podcasts that they can share with clients about identifying potential signs of cognitive decline .” Such tools can introduce the topic “ in advance of a possible need ,” she says .
Don ’ t Play Psychologist But remember : Advisors aren ’ t mental health experts .
“ Be cautious about making a diagnosis without the medical credentials ,” says Kelly Mould , a wealth fiduciary advisor at Johnson Financial Group in Racine ,
Wis . “ Mere old age , eccentricity , or physical disability are insufficient for a finding of incapacity .”
Robb Armstrong , a senior trust officer at Arden Trust Company in West Palm Beach , Fla ., says the typical symptoms of cognitive decline can include “ forgetfulness , repeating oneself , getting lost in familiar places , and difficulty comprehending things that the client never struggled with in the past .”
Of course , the warning signs might be more serious , such as “ frequent driving accidents , medication errors , and impulsive behavior ,” says Mallon FitzPatrick , the head of wealth planning at Robertson Stephens in New York . “ These types of changes can translate into erratic and reckless financial decisions .”
If your client is suddenly buying or selling large amounts of securities , overpaying credit cards , or making huge financial gifts , FitzPatrick says this is usually a sign that you should act immediately . But you should contact your compliance department before reaching out to the client ’ s loved ones . It may become necessary to consult legal counsel or a local eldercare agency , FitzPatrick says .
Protecting Older Clients From Scams At the same time , advisors need to try and protect clients from fraud .
“ Because financial exploitation is a huge concern for aging clients , regular review of financial accounts and daily transactions is essential ,” says Jaime Eckels , a partner at Plante Moran Financial Advisors in Auburn Hills , Mich . “ I personally review withdrawals on my clients ’ accounts daily .”
Sometimes she also recommends a credit monitoring service or freezing the client ’ s credit . “ The best tools are your eyes and ears ,” says Harriet Chase , a financial planner at Aspen Grove Wealth Management in Belgrade , Mont . “ If I notice a normally efficient , organized client suddenly has a messy home and unopened bank statements on the table , those may be signals that things are changing .”
58 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2023 WWW . FA-MAG . COM