What Financial Planning Research Reveals About Your Clients

Speaker A: I'm Kari Sinnott. Uh, and this is your personal financial planning podcast. In the field of medicine research and actual practice work hand in hand, doctors rely on researchers to test treatments, measure outcomes and build the evidence that guides everyday care. And researchers rely on doctors to surface the real questions patients are facing. Without that partnership, medicine wouldn't have advanced to where it is today. Financial planning is no different. Practitioners, they know the pain points, clients in crisis, communication breakdowns and decisions sometimes clouded by bias. Academics have huh, the tools to study those challenges and produce evidence based insights. But when these two worlds aren't connected, we risk guesswork and missed opportunities. But when they come together, planners gain cutting edge tools, clients get better outcomes, and the profession itself moves forward. Welcome to AICPA's Personal Financial Planning Podcast. Hi, um, I'm Carrie Simmit and as the leader of the PFS designation, the financial planning credential exclusively available to CPAs, my role is to keep you informed, educated and connected to a premier community of thought leaders delivering trusted financial planning. We explore the full range of planning topics and the current events shaping our profession. If you're an advisor, a CPA financial planner, or simply want, uh, an inside look at today's topic of evidence based planning, this podcast is for you. Today we're joined by Dr. Megan McCoy who has spent her career at the intersection of research and practice, helping bridge this critical gap. She leads the number one ranked personal financial planning program in the world at Kansas State University. Dr. McCoy, welcome.

Speaker B: Thanks for having me.

Speaker A: Let's just jump right in. Why? With the busy life that financial planners have, who, let's be frank, rely on experience and intuition, why should they be looking at or care about research in areas like psychology, communication or even crisis support? What does the evidence add that practice alone can't?

Speaker B: It makes me think so quickly of the book Freakonomics that came out a couple years ago that really unpacked how assumptions can sometimes be counterintuitive that we may believe something is true. And it works for some of our clients. But through research we can find out what are those assumptions are based on reality. What are only going to work for a small group of our clients and are there better ways of approaching an issue? So I love your first question because first is why should we care about research? And you're 100% right in your introduction that we have to create legitimacy in financial planning by building on the solid foundation of evidence based practices. But then we move into why should we care about client psychology, communication and crisis support. And I think the second Part of your question is where I love to talk about and my students get tired of me talking about because I really do believe that like ah, that financial success is more than just the numbers. It's about creating these human moments with clients that help them overcome deeply ingrained beliefs or cognitive biases that are holding them back from where they want to be. And that's why I love client psychology. Because it gives you a chance to help clients in ways that they didn't realize. And in so much of my research, the client psychology, concepts of communication, listening and underlying cognitive processes or are the things that are most connected to trust, commitment and retention in financial planning?

Speaker A: Clients, as financial planners, we ask how can we help our clients implement, how can we help them be more successful in their finances? But what you just talked about is sometimes there are human based hurdles to implementing the financial plan. And so if we truly want there to be financial, financial success, we have to help them with their human success as well.

Speaker B: Yes. Like my favorite thing I ever read was in this book called Facilitating Financial Help that I highly recommend by Brad, Ted Klontz and Rick Kaler. And they wrote in the very bold letters, there's no such thing as resistant clients. When you have clients who are not following through with your recommendations that are so good, the resistance is not them. The resistance is you're not fully understanding the full picture, you're going too fast or you're missing important information. So shifting our focus from resistance clients to what am I missing? Helps us work with them more effectively.

Speaker A: Dr. McCoy, what if we already have the answer? What if we know 2 plus 2 equals 4 but the client isn't even sure what that 2 means in their life yet. And so they can't get to that financial answer until we help them unpack, uh, hurdles or obstacles or misperceptions in their financial world in order to succeed. Yeah. So your research that you've done, it's really highlighted the importance of client psychology in planning. What, uh, if the studies revealed that might surprise planners about how clients actually make financial decisions and, and why does that matter for their day to day work?

Speaker B: Yeah. I was so happy about the article that just came out. I think it was last month in Journal of Financial Planning that is called Crisis Financial Planners, Pain points and Crisis events. What was one of the most fascinating findings is that in 2008 there was a couple researchers that asked planners and clients how is the planner's communication skills? And in 2008 all the planners said, oh, I think it grow in this area. My program didn't talk about it that at all. And all the clients said, uh, my are great. And then in our study just last year, the findings were reversed. And now planners are saying, I got this. I know how to communicate with my clients. I know this is important. And that overconfidence may be worrisome. Or what I really think is, is that modern clients are demanding more and have higher expectations on their planners. I've once heard that, like after the biggest moments in our lives, like when we get divorced or uh, we get a life altering medical diagnosis or we lose our spouse after a long ill, the first call may be to family members, but the second call isn't to a therapist or their clergyman. It is to their financial planner. Because human life crises have direct implications on their financial plan. And so you being that second call has important implications on how you can manage this crisis and how you can guide them through very difficult situations.

Speaker A: If you think about it, there is not another professional in most people's lives that has such a insight into every aspect of their life. It, uh, the core is money. But because money is a tool that works throughout our lives, whether it's our work, our play, our goals, our lifestyle, that second call that you're talking about makes so much sense to the financial planner. Because now something significant has happened in my life. What am I going to do about it? And what other professional knows all of the details, both emotionally and financially? It's the financial planner. And so we really have to step up. And I think that study is saying even step up, uh, our communication. So in your work, communication consistently, as you said, comes up as a critical skill. So what does the research say is effective communication when it comes to client outcomes and how planners can begin to improve their own skills?

Speaker B: Uh, there.

Speaker A: What can we do?

Speaker B: I write a lot and people will say, how do you keep on coming up with ideas to write about? And I'm like, I steal from what is already known from counseling fields and apply definition planning. There are so many actionable frameworks on, uh, from systems theory to motivational interviewing to conflict mediation research that is out there that can help you be a better communicator with your clients. And schools are taking note because now the CFP board requires client psychology competencies to be integrated into our coursework. So we're using books like Facilitating Financial Health that I talked about earlier or like the CFP Psychology of Financial Planning book, or even I work. I wrote a book last year called Financial Planning Counseling Skills that are all going to cover those communication skills. That planners need to work with their clients in crisis events or at times where they're not following going through with the, uh, implication, the recommendations, like we said. Yes. So I think training is needed in how to do that.

Speaker A: Absolutely. And listen, if you don't have time to get training in order to be a better communicator, at least talk with one of three people. I bet you have a friend in this area who is a, a bartender, two, an emergency call worker, you know, they answer the line or in customer service and if they get complaints, those three people all know one, how to listen. And two, this is the important part, how to help the other person feel heard. And it's, it's amazing to me that that is probably the biggest thing, that please listen in a way that helps me feel heard. And uh, Dr. McCoy, if you allow me to do just a quick shout out to the aicpa, they have a wealth of resources. And to those listening, if you want to dive deeper into these topics and equip yourself with some of these practical tools that we're talking about, visit aicpa.org PfP AICPA members can join the PfP section for 269 per year and you get a full access to the library of resources, uh, including webcasts, podcasts, guides on how to start working in this area. Dr. McCoy, when you study how planners support clients through crisis, you know, we see that a lot with divorce or just like you were talking about, some medical diagnosis comes up. What insights have you found that could help financial planners be both technically prepared and emotionally supportive without, I want to say this the right way, stepping outside of their scope?

Speaker B: I think scope of competence was the theme that came out of my most recent study on this. Planners need, um, new insights. And I wish I had the exact answer, but I'll, I'll hint at the answer model, do more research and come back to you. But like new insights on what is inside of my area of expertise and when do I need to make a referral. And a couple things will help. First, there are moments when we need to be there for our clients and we don't have to do anything but be present and listen. I think the second thing is, uh, this idea that I stole from Christy Archuleta years ago of doing this kind of three part check on what's going on with your clients. It's called a client check, a problem check, and a self check. The client check is, is your client, uh, becoming emotional every time they call you or come to session? Are they talking to you about all their life and emotional needs instead of their financial needs. That's a problem check. And then the self check. Are you working harder than your client? Are you ruminating about your client outside the office? Are you dreading to go see those clients? Check where they're emotional. The problem check where you're not talking about finances. And the self check of you are emotionally drained from this client is going on. That's when we know a referral is needed. And what helps with making referrals to a mental health professional or the local bartender? I'm just kidding. But what helps is having your pocket right. If you already have CPA and legal referrals ready to go, it's a lot easier to be like, hey, we've gone so far with your estate planning. Now I need you to go to this lawyer. It's a lot easier to make that referral if you're like, oh, I think something hard is going on in your life, and this is experiencing a lot of emotional pain. I should, uh, maybe suggest, uh, marriage and family therapist. You. But I don't know any. The referral doesn't come as cleanly. And so I think having those in your back pocket and doing that problem, uh, client and self check will both help with your scope of competence.

Speaker A: I remember a time I had a client who was done earning all the money that they could ever spend in their lifetime, but because they grew up so poor, they always felt like they had to do more. And the client said to me, I feel that the wolf at the door is how he described it. And it wasn't until I addressed that emotional feeling now I was able to back it up with the numbers. But addressing that emotional feeling that he was able to see, there's no wolves that can get in.

Speaker B: I love that emphasis you just made on you need the technical skills. Like, uh, this is a silly analogy, but our. Our like program slogan is a head for business and a heart for people. You cannot just lean on clients. Psychology. You need to have those technical skills to show the wolf in numbers and in words. I love that.

Speaker A: Right. Well, okay. I think this is right up your alley. If research and practice. I don't want this to be true, but if they. They stay disconnected, don't you think the profession risks making mistakes? And. And from your findings, what one area where research has already shifted best practices, do you think could transform the way financial planners serve clients? Because I know you see it first in the research, and then it trickles down into practice. Give us the advanced view.

Speaker B: I Love the fact that the CFP board added client psychology to their competencies area. Our study was really um, that we just released, just looked at which of those competencies are happening most often in the office. Which of those client psychology research areas are the ones that practitioners are clamoring for more training in. Which of the ones do they feel least equipped to, to do? And so I'm hoping that other researchers will take those findings and clearly figure out what is the role of the planner in each of these areas. I think some of the other ways that research transform um, our work with clients is understanding new tools and techniques to use. I uh, think five years ago no one had ever heard of motivational interviewing within financial planning. And I have reviewed several articles, especially from Christina Lynn recently who's using motivational interviewing, an actual communication skill and applying it to financial planning sessions. And I think that could be amazing. Another thing I really am excited to see are some evidence based, um, kind of like check ins you can do with your clients. What's a quick seven question financial anxiety measure you can give clients? Because I can tell you another surprising finding I had a couple years ago of research is that in the General Public About 92% of Americans have financial anxiety. We surveyed clients thinking their rates would be much lower and they were right there with them. It was like 91%. So all of us planners would think hey, our clients are fine, they have a steward of their money, they're usually better off than general population and they're still experiencing financial anxiety. So using those scales to make sure what you think is true is actually true is so important.

Speaker A: Let me make sure I heard that right. 92% had financial anxiety. Did I hear those numbers right?

Speaker B: I might be mistaking but I think it was like 90, 92 of Americans and 91 of, of uh, the clients, but it was really high. If I'm misspeaking, someone can write in and tell me what the numbers were in my own studies.

Speaker A: Right? Look up the research bonus points. Yeah, look up my studies and uh, email financial planningicpa.org and let me know the actual numbers. But that's what I'm seeing in the research too. And so let's just call it 90% plus are uh, having financial anxiety and how crucial to be able to address it. Financial planners listening right now. You can address it and you do help you make a world of difference in the lives of your clients by helping them feel heard, helping them feel seen. That really kind of reduces that wall and also providing the technical expertise to show Here are the potential outcomes going forward. Both of those things together reduce the anxiety substantially.

Speaker B: Can I share one last thing is that we actually inventory planners about the research gap. And um, one thing that was shared in the results from planners was that we want research, we just don't know how to get it. And so I just want to give a quick plug that I work for the CFP Board's Journal Financial Planning Review. It is completely open source, so anybody can access any of the articles available there for free. And then the Journal of Financial Planning, which is another great resource, is completely free if you are a FPA member. So please get the free research, listen to the nerds at the conferences like me, and let's bridge the gap between researching and practice.

Speaker A: I love that and so insightful. And thank you for that pot of gold of future practices that are going to happen in our profession. So appreciate it. And if you're an advisor who's listening right now and you want to deliver premier Financial Planning with confidence. In addition, explore everything the AICPA PFP section has to offer@aicpa.orgpfp As I mentioned earlier, for 269 a year you get access to the entire library of technical guidance, webcasts, planning tools, Expert insights like Dr. McCoy, thank you for being here, all designed to help you serve your clients at the highest level. And if you're a CPA with 3,000 hours of financial planning experience already in the pocket, consider showing your expertise next to your name by obtaining the PFS credential@aicpa.org PFS this is our podcast together, and if this episode helped you in your practice, we'd be grateful and frankly honored if you share it, uh, with your professional community. With almost 500,000 downloads so far, the AICPA PFP Podcast is helping to advance the profession one listener at a time. This has been Kerry Siddant for the AICPA Personal Financial Planning Division. Thanks for listening and until next time, keep earning trust through clarity, guiding with compassion, and delivering premier planning that elevates our profession.

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