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Most experts agree that communication skills are important for financial advisors, including retirement plan advisors. Yet communication is an area in which few financial professionals receive any formal training. Further, specific guidance for advisors on how to improve these critically important skills is difficult to find.

In my own work as a financial wellness coach, I’ve found communication skills are essential—I can’t dictate to my clients what they should do and expect them to follow through. What I can do is communicate in such a way that I encourage their own intrinsic desire to reach the goals they’ve said are important to them. By taking a more client-centered approach and developing a plan together, clients are more motivated to actually implement the plan. The same is true of retirement plan participants. This client-centered focus is one that is also gaining fast traction in retirement advising at large.

One approach to communicating that I have found especially helpful comes from motivational interviewing (MI). MI is a conversational approach that helps people normalize and resolve ambivalent feelings about change, and helps them find their own intrinsic motivation to successfully change their behavior. As a method for promoting positive behavioral change, it supports behavior change in a way that is congruent with the client’s own beliefs, values, and concerns, rather than simply telling the client what they should do. MI originally developed from the addiction counseling field, and has a solid evidence-base–over 119 randomised controlled trials demonstrating a small to moderate effect across multiple health-related areas (Lundahl et al, 2010). In this article, I’d like to share six practical and specific strategies from MI that I have found effective.

What makes Motivational Interviewing different?

There are three core principles that underlie the communication techniques used in MI, and that are important to keep in mind:

  1. MI is a particular kind of conversation about change, similar to coaching or consulting, and it’s collaborative. Collaboration implies a partnership between the advisor and client, builds rapport, and facilitates the client’s trust in the professional relationship. It does not mean that the advisor automatically agrees with the client about the root cause of a problem, for example, or the best way to address it. The collaborative process is focused on mutual understanding, not about the advisor always being ‘right’. The advisor can still give recommendations based on their specific expertise, especially when the client requests it.

  2. MI is client-centered and honors the client’s autonomy. MI recognizes that the real power for changing financial behaviors rests with the client. It’s always up to them to follow through with making change happen. This principle reminds both advisor and client that the client is ultimately responsible for their choices and actions. Advisors can reinforce the idea that there may be no single ‘right’ path to change, and that there are multiple ways change can happen. Clients can also be encouraged to brainstorm ideas and create a ‘menu of options’ for specific actions they can take to achieve their desired goals, especially when these involve effort or change on their part.

  3. MI seeks to call forth or evoke the client’s own motivation and commitment. The advisor draws out the client’s thoughts and ideas because motivation and commitment to change is more powerful and lasting when it originates with the client. No matter how good the advice an advisor might give to convince the client of the need to change, or how much we want them to change, it is more likely to happen when the client discovers their own reasons and determination. The advisor can draw out their client’s motivations, skills, and resources for change. Again, this doesn’t mean the advisor can’t provide specific recommendations based on their professional expertise.

Six Practical Strategies

There are several communication strategies employed in MI to demonstrate the principles described above. These include assessing the participant’s readiness to change, asking open-ended questions, reflective listening, normalizing difficulty and ambivalence, asking ‘stage-setting’ questions prior to offering financial advice, and using summary statements.

One: Assess readiness to change

Because financial issues can be sensitive for many people, it’s important to assess the participant’s readiness to change. One way to do that is through asking permission to discuss a specific issue, which give an indication of how open the participant is to change and can defuse defensiveness. For example, a participant who has a high income but no emergency fund could be approached by saying “I notice that you have an annual income of $__, which is great. At the same time, I see you don’t have an emergency fund. Would you be open to talking more about that?” If the participant says no, you can state that you understand now isn’t a good time, and ask if it’s OK to revisit the topic at a later date.

Two: Ask open-ended questions

Open-ended questions allow the participant to tell their story. Using open-ended questions allows the advisor to build a richer, deeper conversation that flows naturally and promotes empathy. In contrast, too many back-to-back, close-ended questions can feel like an interrogation. Open-ended questions encourage the participant to do most of the talking, while the advisor listens and responds with a reflection or summary statement. The goal is to promote dialogue that can be reflected back to the participant by the advisor. Using the emergency fund situation again as an example, an advisor might ask the participant what they know about having or building an emergency fund, or ask them to describe some ways that having an emergency fund could help them. Some other examples of open-ended questions include:

  • “What brings you here today?”

  • “What’s happened since we last met?”

  • “Tell me what you like about [situation or issue].”

  • “Tell me more about when this first began.”

  • “What was that like for you?”

  • “What makes you think it might be time for a change?”

  • “What’s different for you this time?”

Three: Practice reflective listening

Asking open-ended questions yields valuable information when we listen reflectively. Reflective listening involves carefully listening to the participant and then reflecting back or paraphrasing the gist of their statement in the form of a hypothesis. For example, “It sounds like you are having a difficult time finding ways to save toward an emergency fund.” Reflective listening is an effective way to express empathy for the participant, and encourages them to share their experiences in more depth. Another goal in using reflective listening is to have the participant, rather than the advisor, state the arguments for change by summarizing the pros and cons associated with the behavior to be changed. Reflective listening helps the participant feel heard and understood, and allows the advisor to avoid lecturing the participant or telling them they need to change. Some sample phrases include:

  • “I get the sense that….”

  • “It sounds like….”

  • “What I hear you saying is…”

  • “It seems as if….”

  • “So on the one hand it sounds like…. And, yet on the other hand….”

Four: Normalize difficulty and ambivalence

Changing financial behaviors is hard for most people, and it often takes multiple attempts. Motivation is not a stable trait; it’s a state of mind that can vary considerably over time. It’s also very common for people to feel ambivalent about change, even positive change that will clearly benefit them. Normalizing is not intended to make participants feel comfortable with maintaining the status quo or not changing problematic behaviors. Instead, it helps them understand that many people experience difficulty changing, and reminds them that they are not alone in their struggles. In my own experience, I have heard clients say that normalizing statements also help them not feel shamed or judged about their past financial behaviors. Some sample normalizing statements include:

  • “A lot of people feel concerned about changing their [spending habits].”

  • “Most people report both good and not so good things about their [spending behavior].”

  • “Many people report feeling the way you do. They want to change their [spending], but find it difficult.”

  • “That is not unusual, many people report having made several previous attempts to [save more money].”

  • “A lot of people are concerned about [not being able to spend money on things they enjoy] when [trying to build up their emergency fund].”

Five: Ask ‘stage-setting’ questions

Generally, simply giving advice to people does not work very well—most people do not like being told what they should do. Research in healthcare, for example, has shown that only 5% to 10% of smokers are likely to quit when told that they should because smoking is bad for their health. Most of us prefer having choices when making decisions related to changing behaviors.

How information is presented to a participant affects how it is received. When new, relevant information is presented in a neutral and nonjudgmental manner, it empowers the participant to make a more informed decision about changing a problematic behavior. One way to do this is to provide feedback that allows the participant to compare their behavior to others’ behaviors, so they know how their behavior relates to organizational or even national norms, such as plan participation or contribution rates.

When an advisor asks a participant what they know about how their financial behavior affects other aspects of their life, such as how a credit score affects loan rates, participants might say “not much” or even have erroneous information or beliefs. This can be followed-up by the advisor asking if they are interesting in learning more about the topic and then being prepared to provide them with relevant advice or information that the advisor has prepared or has available. Whenever possible, it’s a good idea to focus on the positives of changing. Here are some example ‘stage-setting’ questions and statements:

  • “Is it OK if we spending a few minutes talking about….? [Followed by] “What do you know about….?” [Followed still by] “Are you interested in learning more about…..?” [After this, the participant can be offered relevant information or material related to changing their problematic behavior, or what impact that behavior is having on other areas of their life.]

  • “What can you tell me about how your current spending affects your ability to meet your financial goal of __?”

  • “So you said you are concerned about not being able to spend money on things you enjoy, like [going out for drinks after work with friends], if you start saving more money. How much could you save if you went out less often? Are there other ways you could [spend time doing something relaxing with your friends] that would help you meet your savings goal?”

  • “I’ve taken the information about your finances that you provided at our initial assessment, calculated your monthly average retirement saving percentage, and put together this chart, with some national averages of people in your age group for comparison. Would you be interested in seeing how increasing your monthly savings by a small amount, compounded over time, could increase your future income?”

Six: Use summary statements

Summary statements are a way to tie together information participants have already expressed, especially in terms of reflecting ambivalence around change, and help move the conversation to a different topic, or expand or deepen a discussion. To use a summary statement effectively requires the advisor to listen carefully throughout the meeting. Summaries can also be an effective and satisfying way to either end a meeting by offering a summary of the entire meeting, or to transition a talkative participant to a different topic. Paradoxically, simply reflecting back or summarizing what participants have said without offering advice can prompt them to suggest possible solutions. An example of a summary statement could be: “It sounds like you are concerned about not having an emergency fund because it is costing you a lot of money in high interest credit card debt when you charge unexpected expenses, and those bills are also causing you a lot of stress and creating conflict at home. You also said saving more money will probably mean cutting back on doing some of the things you enjoy now. That doesn’t sound like an easy choice to put into practice.”

Ideas and action plans for improving the participant’s financial wellness, especially those that involve changing problematic behaviors, are much more likely to be implemented when generated at least in part by the participant. The advisor has domain and subject matter expertise when it comes to financial and retirement planning. At the same time, the participant is the expert on their life and financial goals, what they are willing and able to do to meet them, and creative strategies for achieving them. Advisors can offer advice, but it’s always up to the participant to take the necessary actions. A collaborative, empathetic, and nonjudgmental approach can go a long way toward encouraging plan participants to follow through and act on that advice.

Dr. Martha Brown Menard is the Senior Researcher and data diva for Questis. She is a research scientist, financial wellness coach, and member of the Association for Financial Counseling and Planning Education. She is passionate about democratizing personalized financial guidance through scalable and configurable technology.

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