Exploring emotional barriers to financial products

Financial planning, like selecting a retirement solution, can be a once in a lifetime decision. And different can evoke a range of emotions in your clients, which could interfere with their long-term planning. In fact, psychology shows us that our emotions have a bigger impact on our decision-making process than we might think. So, what are the emotional barriers your clients could be facing? And how does this influence their long-term decisions?

Identifying emotions around products

Each product has its own barrier and they’re grounded in the emotions of risk management. For example, equity release might be a difficult subject for clients to approach, because of the emotional attachment they might feel to their property. Rather than seeing the potential value, they see their family home and the memories they’ve created, as well as the opportunity to leave something for future generations. Products that help with estate planning can also evoke emotional reactions because for some clients, discussing leaving a legacy might be an uncomfortable topic. While it ensures that they have plans in place which might help their family, discussing death for some clients might be challenging.

There is also the additional challenge that clients might only get to make once. This doesn’t leave any room for learning, which can add pressure to an already daunting decision. And how some clients choose to deal with this, is to avoid deciding altogether. So, why do your client’s emotions have such a big influence on their decision-making abilities?

Exploring the psychology behind our emotions

Long-term planning requires clients to confront uncertainty and think about what might go wrong, which can trigger many emotions. This impacts the decisions they make because there is a relationship between emotions and cognition - they’re not separate pathways in the brain, but interconnected systems. Here’s what the psychology behind our emotions tells us.

Discussing the emotional subjects

Our research shows that financial advisers are comfortable talking about emotionally charged issues with their clients and do so on a regular basis. Some advisers use humour to help their clients feel at ease, while others have a more empathetic approach. However, a client’s emotions may not just be a barrier to making decisions for the long term, but also when it comes to sharing information with their adviser.

Psychological research shows that people expect meaningful conversations to be awkward and less enjoyable than they turn out to be. In general, people resist having substantive conversations. But after a meaningful conversation, they feel more understood and connected to the other person. This increases their trust and openness. So, creating two-way substantive conversations can aid advisers in having a deeper connection with their clients, which could ease their feelings around different products.

Clients are ready to listen, but there are other barriers that could be preventing the two-way conversation that both the client and adviser require when planning long term. For example, some clients might have a low understanding of financial products, which could make them feel slightly vulnerable. So, what is the key to creating meaningful conversations and putting your clients at ease?

Unlocking deeper conversations

Empathy can play a huge role in helping clients to be honest about their needs and it can be a cognitive or emotional response. Cognitive empathy is taking the perspective of another person and knowing how they think and feel. While emotional empathy is a shared emotional experience, giving advisers an opportunity to feel what their clients feel. Psychology shows that people find it easier to disclose information with someone who is empathetic. This also helps to build trust in the client/adviser relationship.

“I've been through divorce, difficult times with children, financial situations changing. But he always understood what my needs were at the time, because we've had a long-standing personal relationship. I am satisfied, I trust him. That's one of the main reasons I stay.”

Finding the emotional thread in the conversation could give you an opportunity to share something personal to connect with your clients. This could be the beginning of a two-way substantive conversation, which could help your clients build a stronger connection with you. And deeper communications could lead to a shared understanding of holistic needs.

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