Question 1: Uncover the risk attitudes your clients already have

Question: Shall I show you what many other people have done, or would you prefer something innovative or different that I can show you? If clients answer with wanting to know what others have done, then they prefer safety in numbers. These people are going to be risk-averse; they want to know what others have done so they know it’s less risky. If a client answers with no, I'd rather you tell me something innovative or show me something different, they're going to be risk tolerant. Their conversations are going to be really engaging if you talk about where this might lead them or what new opportunity this might be created because of this financial decision.

Question 2: Discover the level of control your clients like to have

Question: Do you want me to go through all the details? Or would you prefer a summary now? People who want the details upfront generally want to be in control because they want to know everything that they can talk about. They can look through the details to make sure there's nothing risky, as they’re more likely to be risk averse. People who want a summary are a bit more risk-tolerant and not so bothered about feeling that they are in control of that process. They want to be in control of the end result. Advisers should focus on what it could lead to rather than how it gets them there, this will make them excited and engaged.”

Question 3: Understand if the client is thinking about themselves or others to tailor conversations to suit their needs

Question: Can you tell me what you'd like to achieve by having more money available to you? If they start talking about the family, you know that they are quite socially minded and it's for the good of the group. Use this to focus the conversation on their family. If they use the words ‘me’ and ‘I’ then this would indicate their thinking about what it looks like for them as an individual before they think about the family. Advisers with clients who answer in this way should start the conversation with how the suggestions will benefit the client.

The family influence expert interview

Discover the psychology of the family influence and what this means for advisers

When it comes to planning long term, clients might want to seek out another opinion on what’s best for them. But how much does their family’s opinion influence their decision?

We sat down with Dr Simon Moore, Behavioural Psychologist from Innovationbubble and from Canada Life, Nick Flynn, Director of Retirement Income and Alice Watson, Head of Marketing Insurance, to understand the psychology of the family influence and what this means for advisers. Here’s what they think.

Dr. Simon Moore

Behavioural Psychologist, Innovationbubble

Alice Watson

Head of Marketing Insurance, Canada Life

Nick Flynn

Director of Retirement Income, Canada Life

The psychology behind the family influence

Simon, can you explain the psychology behind the family influence on people when thinking longer-term?

Often when people are parents, they’re thinking about their children as they are right now, with regards to money, protection and security, not what they or their children will think or need in the future. This is called present bias.

Along with this, everyone feeds into that process and not necessarily verbally. They’ll have perceived opinions in their head, a situation where they’re trying to tick all the boxes. This may mean they’ll choose an outcome that's going to have less resistance or might go down better with family.

This all starts with good intentions, in the fact that people are obviously thinking about providing, protecting and, but from the psychological point of view, people can misperceive what that future looks like, what they’re trying to achieve in the future and what the family members think that future should look like.

Simon, are there any other psychological elements at play here?

Most families will have an elected or a self-appointed leader, I like to refer to them as an ‘Elder’. When that person or others perceive them to be this ‘elder’ there's a lot of ego and status riding on that.

They must come across as being knowledgeable but as we know from the research Canada Life has done, people might say they are confident in making those decisions but aren’t as confident as they might say.

Is there an emotional connection to their family that aids or hinders people when it comes to thinking long-term?

There's a kind of a positive connection and a more negative one.

The positive is that people do want to protect and provide a stable future for family members. However, let's not forget that some individuals think about themselves. This is where the ego kicks in a little bit as well.

That’s one of the advantages of a financial adviser, they can diffuse that emotionality within the family, as an objective middle person who the client knows doesn't have any emotional aims. All they're doing is providing the information and aiding the conversation. That is quite an advantage that we shouldn't undersell.

Nick, why is it important for advisers to understand the psychology that sits behind clients’ thinking when it comes to family influence?

I suspect many advisers have some of this insight already but may not quantify it in such a way, these extra insights are always valuable. Understanding what makes your clients tick is a key part of gaining trust and making the most suitable recommendation.

"That's one of the advantages of a financial adviser, they can diffuse that emotionality, within the family, as an objective middle person who the client knows doesn't have any emotional aims. All they're doing is providing the information and aiding the conversation. That is quite an advantage that we shouldn't undersell.

Dr. Simon Moore - Behavioural Psychologist, Innovationbubble

The sharing of goals with families

Our research shows that more than half of people say they would rather share their long-term goals with family, while only 23% say they would share their goal of a good retirement with a financial adviser¹.

Simon, what is happening psychologically when people share goals with family compared to sharing them with advisers?

I think there's a lot of safety behaviour going on here because there's less risk sharing these with family.

Imagine if a person talks to a financial adviser about something without their family knowing and then tells them they’ve seen an adviser. The reaction they’ll get will be surprise and possibly a little bit of a chastise. People aren’t silly. They know this and they've learned, they've got to clear it with the so-called Family Committee first.

Alice, can you provide an example of how this may work?
Discussions with the family particularly around Home Finance now can aid future conversations. So that in 20 years’ time, if a family member asks, “why did you choose to do this?” the client has the option to say “well, we had a chat about this internally and we all agreed as a family that this was the right thing to do.

Simon adds, Speaking with family first allows them to test the waters out in terms of whether they would approve or reject that idea from the long-term planning point of view. And there is less risk in airing ideas with family, as they’ll tell them bluntly whether that's a silly idea, saving them from potential embarrassment with a financial adviser.

Simon, around saving the client from embarrassing themselves with an adviser, can you explain this further and how advisers could help to remove this concern?

We must think there's potential embarrassment here, through being judged. There's a confidence issue. People won't admit generally that they feel out of their depth or don't really know as much as what they're telling you. They know they want an element of control because of that.

If advisers can give them an element of perceived control, discussions will work better.

Also, you mentioned that providing clients with an element of perceived control in discussions could aid advisers in conversations. Can you explain why?

It could help them have more relevant, engaging and persuasive conversations with their clients. People connect better with others when they see suggestions packaged up from an emotional point of view in terms of the family committee and dynamic.

It's not always just looking at things from a practical point of view and focusing on what financial security allows us to do. I always mention another factor here that’s just as important, which is that it allows us to have the element of time. Building conversations around the emotional aspects of what financial security can provide could help engage clients.

Alice adds, Thinking about what the product facilitates, not what it is in black and white. So, for example, one of our products may mean a client can clear an amount of debt that then allows them to work part-time or retire. The actual benefit of this is the time they would have as a grandparent to spend time with their grandchildren.

Simon explains, Along with this, advisers need to understand if the conversation they have with their clients is around negating risks that are associated with planning their future, or about how the adviser can help them do something new.

Putting the psychology into practise

So, Simon how can advisers move towards conversations which might engage clients better?

We know from a psychological point of view that there are four groupings of people in the world, regardless of their gender, age, ethnicity, nationality or geographical location.

We all have elements of these four groupings within us however, one of these will be stronger than the other three. And because of that, that influences how we think, view the world and how we need to be spoken to. So, advisers understanding what group their client is swaying toward could help them adapt conversations to better suit the way their clients think.

I’ll explain these four groups and the ways advisers could use these insights in their conversations:

A risk-averse organiser

These people are organisers and like to know what's about to happen next. They are risk-averse and prefer predictability to surprises. They’ll want advisers to provide them with all the details, so don't start on the opportunity with them because they won’t have the headspace, they view the world as risky.

A risk-averse member

Again, these are quite risk-averse people but in a slightly different way. They're not so bothered about the details. They’re all about social connectivity and membership. They will be reassured by advisers highlighting that lots of other people go with a certain product or policy. It's all about numbers and safety for these people.

A risk-tolerant leader

These people are risk-tolerant and it’s all about how something is going to improve their status, ego, or make them feel intelligent. Focus these types of clients’ conversations on how the product or service will improve their status, social standing or ego.

A risk-tolerant explorer

These people are risk-tolerant, but they want to know all about how something is going to take them to the next level of improvement. For them, it’s all about exploration, innovation and adventure. They’re all about what new doors might open if they engage with this and what new things might be available to them.

Nick, from your point of view is there anything else you can add to Simon’s insights here for advisers?

Look for these character traits and replay some of the words. Does the client react well to some of the narratives? And it’s not just what advisers hear but what they see as well. Family pictures, the cars driven, the household products purchased. These can also indicate the client’s character and help create a clearer picture.

However, having them defined in four groups makes a huge amount of sense. I am sure every adviser can allocate their long-established clients to these boxes and in some cases more than one box. For new clients, it may take more time.

Alice adds, A clearer understanding of the is needed upfront before the detailed conversations begin, so that advisers can tailor conversations to be better received from day one.

Simon, can you provide examples of how advisers could identify the different elements that people have from across these groups, to then adapt their conversation to suit their clients?

There are three questions that will be useful for advisers to use, to identify the best way to construct their conversations to aid engagement from their clients.

Question: Shall I show you what many other people have done, or would you prefer something innovative or different that I can show you?

If clients answer with wanting to know what others have done, then they prefer safety in numbers. These people are going to be risk-averse; they want to know what others have done so they know it’s less risky.

If a client answers with no, I'd rather you tell me something innovative or show me something different, they're going to be risk tolerant. Their conversations are going to be really engaging if you talk about where this might lead them or what new opportunity this might be created because of this financial decision.
Question: Do you want me to go through all the details? Or would you prefer a summary now?

People who want the details upfront generally want to be in control because they want to know everything that they can talk about. They can look through the details to make sure there's nothing risky, as they’re more likely to be risk averse.

People who want a summary are a bit more risk-tolerant and not so bothered about feeling that they are in control of that process. They want to be in control of the end result. Advisers should focus on what it could lead to rather than how it gets them there, this will make them excited and engaged.”
Question: Can you tell me what you'd like to achieve by having more money available to you?

If they start talking about the family, you know that they are quite socially minded and it's for the good of the group. Use this to focus the conversation on their family.

If they use the words ‘me’ and ‘I’ then this would indicate their thinking about what it looks like for them as an individual before they think about the family. Advisers with clients who answer in this way should start the conversation with how the suggestions will benefit the client.

Nick, by forming this type of relationship with clients, what else can this provide advisers?

Once the client is secure and the relationship is developed, see if this can expand into the family. While it’s rare for family members to have identical needs, there are often a lot of common goals and, it can only assist in building mutually successful long-term relationships for advisers.

Top five key insights for advisers

People start with good intentions to provide for and protect their families, but they can misperceive what their future may look like based on their current circumstances.
People won't admit generally that they feel out of their depth or don't really know as much as what they're telling you. They know they want an element of control because of that.
Building conversations around the emotional aspects of what financial security can provide could help engage clients.
How you can use 'the four behavioural groups' in your day-to-day work with clients.
Three key questions to help advisers identify the best way to construct conversations with their client.

Sources:

Source: Research for Canada Life was conducted in partnership with Savanta. Read more about the research.

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