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Anxious Clients Neglect Advice

Seeking financial advice puts a person in a vulnerable position.

Ted Klontz, associate professor and founder of Financial Psychology Institute at Creighton University, told FPA Annual Conference attendees during his education session, “Gifts from Neuroscience: Building Robust Resilient Client Relationships,” that clients are probably already stressed out when they come to your office and it’s up to you—and the environment you create in your office—to calm them down.

“Our challenge as experts is to keep that anxiety level down,” Klontz said.

Keeping those stress levels down is vital to having clients follow your advice, said Ryan Sullivan, CFP®, CLU®, ChFC®, of MoneyGuidePro, who in his Annual Conference presentation, “Measuring and Managing Stress in the Financial Planning Process,” addressed results from research by Sonya Britt-Lutter, Derek Lawson, and Camila Haselwood published in the December 2016 issue of the Journal.

“When clients are stressed they make bad decisions or don’t stick with decisions they’ve already made,” Sullivan said.

Britt-Lutter, Lawson, and Haselwood monitored the heart rates, skin conductance (sweat levels), and skin temperatures of clients working with an adviser for the first time. Essentially, they found when clients were more relaxed, they were more likely to follow your advice.

The research Sullivan presented noted stress levels decrease as the planning process progresses—peaking in the beginning and during discussions on how to improve finances while leveling out during the other phases. However, stress levels were higher for clients doing in-person meetings. Those clients started the process at high levels before leveling out to moderate levels. Stress levels among clients working with a planner virtually started out moderate and dropped to low levels or no stress at all. This may speak to the need to for planning firms to adopt virtual meeting technology or robo-solutions.

Other key findings included: women were more stressed than men going through the research process; and advisers (who were also monitored like the clients) also had high levels of stress prior to the meetings, though it leveled off further down the process.

Because clients are more stressed when meeting in person, do what you can to make your office, your demeanor, and your information-gathering process welcoming. Plus, try to keep your stress levels down; doing so will help keep your clients’ stress levels down, too.

If you missed FPA’s Annual Conference this year, register for next year’s event in Chicago, Ill., from Oct. 3-5, 2018.

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Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.


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The 6 Personality Traits of Successful People

Money is what makes all your clients’ priorities possible, Jean Chatzky, financial editor for the Today Show, told FPA Annual Conference attendees earlier this month.

And if they’re constantly worried and stressed about it, they’re probably going to stumble upon what seems like more than their fair share of problems. Though this might sound a little like wishful thinking Chatzky claims it’s true: more happiness will lead to more money for your clients.

Chatzky outlined the six traits of successful and wealthy people that she identified through her research. Chatzky conducted a study of 5,000 people and found that personality traits are just as important as good financial habits.

Here are the six factors Chatzky found were key to success:

Happiness or optimism. Happiness is key to success—just not too much of it. Among Chatzky’s study participants, those who were too happy (a 10 on a scale of 1 to 10, 10 being blissed out) weren’t as successful as those who were an eight. The eights were better problem solvers, they lived longer, were more successful, earned more money, had higher amounts of emergency savings and received greater evaluations from their colleagues. If your clients are too happy, perhaps find a way to make them a little more cognizant of reality; but if your clients are miserable, figure out how they can make themselves happier.

Resilience. Thomas Edison “failed” hundreds of times when inventing the lightbulb, but he didn’t see it that way. He said he succeeded in proving that hundreds of ways didn’t work. People who have resilience can overcome problems in their work, personal and financial lives more readily than people who aren’t resilient.

“The best news about resilience is that you don’t have to be born with it,” Chatzky said.

Connectedness. People who had built up a good amount of social capital—connecting with people—were more successful than people who did not have good connections. These people made time to connect with people despite their “busy” schedules. Successful people not only made time to connect with friends and family but also to forge new relationships.

Passion. Having passion about a career is what moves people from a life of financial struggle to one of financial success. The people who have passion just want it more than others. These people are not just pursing a job or even a career, they are living and doing what is their calling. Figure out what your calling is and live your passion.

Financial Habits. Successful people are habitual savers, have appropriate debt, are able to level emotions and have a long-term plan, Chatzky said. Chances are your clients have better financial habits than the average American (most of whom are terrible savers), but it’s never a bad idea to reinforce their good habits.

Gratitude. You always want more if you’re not grateful for what you already have. Chatzky said gratitude is key among successful people and as a result of them being more grateful, they are also more generous (giving to people and charitable causes), less depressed and healthier.

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Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.

 


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Life After the Storm

Hurricane Harvey devastated Texas and came for parts of Louisiana in late August. More than 51 inches of rain inundated Houston, according the National Weather Service. USA Today reports that more than 30,000 people have piled in to Houston shelters.

Now that the storm waters are starting to recede, the full scope of the damage is starting to come into focus. According to AccuWeather, the total damage is expected to reach $190 billion, almost four times the amount of damage caused by 2005’s catastrophic Hurricane Katrina. Insured losses, according to CNBC, are expected to reach $20 billion.

There is a long road to recovery ahead. Here are some tips to keep in mind as you begin to assess and address the damage to your businesses and to your clients:

Take care of you first. With 475 members in the FPA of Houston chapter, no doubt you are suffering yourselves. Carolyn McClanahan wrote in Financial Planning that you must help yourselves before you help others. But when you do have some semblance of starting to recover and you’re ready to reach out to your clients.

Let your family, friends, and clients know you’re OK. You can Tweet, post on your firm’s Facebook or Twitter page.

Jonathan Swanburg, CFP®, an adviser affected by Harvey, wrote in Financial Planning how when he reached out to his clients, they only wanted to ensure that he was safe.

“When I sent out an email on Friday morning praying for our client’s families and explaining our firm’s contingency plans for flooding and loss of power, none responded on the business issues at hand,” Swanburg wrote. “Instead, they all expressed concern for my team and our families.”

Make sure they’re OK. Call them when you get a chance. Many of them might not answer but try until they do. Ensure they are physically and mentally alright before tackling the concrete financial issues. The emotional toll of this catastrophe will be just as high as the financial toll.

Many might need extensive repairs not covered by their insurance. According to the Washington Post, majority of the homeowners in areas hit hardest by Harvey don’t have flood insurance. Citing data form the Federal Emergency Management Agency, the Washington Post reports that only 17 percent of homeowners in the Texas counties hardest hit have flood insurance.

“Unfortunately, most families in Houston do not have flood insurance and are going to be struggling for a very long time,” Swanburg wrote.

If your clients are among those without flood insurance, look into federal disaster relief aid (go to DisasterAssistance.gov), U.S. Small Business Administration disaster loans, or home equity loans. Be advised that homes must first be repaired before a home equity line is approved.

Help with the insurance processes. CNBC reports that insured losses from this storm could reach up to $20 billion. And it will likely be some time before adjusters can get in and assess the damage. Advise clients to make only repairs that prevent further damage until adjusters can come. Have them take pictures of everything. Save all receipts for materials, housing, meals, and storage. Encourage them to file claims as quickly as possible. Keeping receipts will also help with claiming a casualty loss on their tax returns.

Utilize your contacts to expedite getting your clients the help they need. McClanahan said that insurance agents are overwhelmed during disasters. Adjusters work on a first-come, first-served basis, so if you have connections in the insurance industry, utilize them to better serve your clients.

“While Harvey was a catastrophe for millions of people,” Swanburg wrote, “it was also a reminder that at its best, financial planning is a uniquely personal business built around wonderful people and lifelong relationships.”

If you are an FPA member set to renew this month and were affected by Harvey, FPA will extend your membership while you’re recovering. If members affected by Harvey have registered for FPA Annual Conference, refunds will be issued if you are unable to make it. Contact Member Services for more information, 1-800-322-4237 or email MemberServices@OneFPA.org.

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Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.