Understanding clients’ emotional relationship with money

During our virtual 'Change the Game' conference last month, Catherine Morgan, founder of The Money Panel, talked about our emotional relationship with money and how advisers can support clients in these uncertain times. She made the point that when clients have their initial meetings and annual reviews, they aren’t there to talk about money. They want the adviser to deal with the fears they attach to money and answer questions like: “Will I have enough? Will I be able to lead a healthy life? Will I be able to support my children? Will I be able to support myself and my partner through long-term care?”

Catherine explained that although advisers have conscious level discussions with clients all the time, only the client can change their subconscious level decisions, which can affect their beliefs, habits and behaviour, including whether or not they stick to the financial plan. She said: “Typically in financial services we don’t often think about the emotional side of money, we often focus on the logic. The financial cash flow forecast, looking at factfinds, looking at spending, income, outgoings. It doesn’t help the client think about how they can change how they think and how they feel about money.”

People’s relationship with money is affected by many different influences, from personal and generational trauma and inherited beliefs to pressure to financial literacy and societal pressure. In Catherine’s view, when building the financial plan it is vital to “relate it to what is going to internally motivate the client that is going to be long-term towards something pleasurable and looking at their unconscious behaviour patterns is really valuable.”

During her presentation she told us that one way advisers can do this is to look at how a client spends their money. This doesn’t mean a simple income versus outgoings. She told us: “What you spend is what you value and what you save is what you seek”. So taking a really deep dive into where their cash goes each month can build a better understanding of their values and start a conversation about what motivates them.

Technology can help here, with Open Banking functionality now offering a holistic view of the client’s entire financial portfolio in one secure place. We recently launched the option for advisers’ clients to link their current accounts, credit cards and savings accounts to Intelliflo’s Personal Finance Portal (PFP) without the need to share their login details. It allows you to see all of your client’s finances in a single view with new transactions updated daily.

Not only does this give you a full picture of your client’s finances, including held away assets, but also provides an incredibly accurate view of their incomings and outgoings. This will help you better understand their spending habits and generate a discussion around the motivation behind different behaviours. Once you and the client recognise why they make certain short-term financial decisions, it can help drive the reasoning to encourage sticking with the long-term financial plan.

As advisers navigate through this prolonged period of uncertainty, it is more important than ever to help clients keep their financial plans on track and provide reassurance as personal circumstances change and the domestic and global economic picture evolves. Making best use of technology to cut the admin burden and increase efficiency gives you more time to spend with clients and deliver value by helping them identify what they most value and to achieve their short- and long-term goals.