1. Precontemplation

Most people in this stage of change are in denial. In the precontemplation stage, there is usually little to no understanding of the problem. Clients will exhibit a lack of responsibility for the issue, or they think there is no issue at all, even if they have an underlying feeling that things aren't working the way they want them to be. While the client may feel that their circumstances aren't ideal, they have little interest in changing their own behavior. A client may be in the precontemplation stage if they are overspending and maxing out their credit cards, pulling funds out of their retirement, or financially enabling friends or family.

Take the case of Carmen, for example. Carmen wanted to invest in her retirement but didn't feel she made enough money to save for the future. Her colleague referred her to a financial planner who reviewed Carmen's spending and assets. The planner discovered that Carmen had been paying her sister's rent for the past few years, preventing her from saving any money of her own. But Carmen's sister was now working a steady job. The planner asked Carmen if it was possible for her sister to take over her own rent payments to allow Carmen to invest in a retirement plan. Carmen wasn't ready to consider letting her sister down, even if it threatened her ability to secure her own financial future.

At this stage, a financial planner would not want to lecture Carmen about paying her sister's rent. The planner merely asked her if it was possible for her sister to assume responsibility for her rent now that she had a job. Carmen's resistance to identifying her financial support of her sister suggests she is in the precontemplation stage of change. She is not taking any action to stop supporting her sister. She may never change her approach because she may not be aware of the consequences of paying her sister's rent on her own financial goals. While an advisor may be obliged to share their concerns with Carmen about how this might impact her own financial security, a skilled financial planner would change conversational tactics once Carmen showed signs of resistance to that advice (specific conversational tactics are discussed later in this chapter).

2. Contemplation

In the contemplation stage, the client may be able to see that there is a problem in need of a solution. The client may be able to acknowledge some of the negative consequences of continuing an unhealthy behavior and could exhibit a readiness to take responsibility for the situation. This is the point at which a client may be open to learning more information that can help them examine the problem and learn about potential solutions. The client may begin to seriously consider a financial planner's suggestions for change, even if they are still not sure if they want to change, or if change is even possible.

Carmen, at this stage, might go home and add up all the money she has given to her sister over the years. Through the help of her financial planner, she may begin to realize how much her retirement savings would have grown had she put that money in a tax‐deferred retirement account instead of giving it to her sister. She may be struggling with telling her sister that she needs to pay her own rent, even if she's starting to see that it would benefit them both and allow for a healthier relationship between them.

Although Carmen might still not be ready to address the issue, she is now aware of the problems and is open to thinking through the implications of her sister's growing financial dependence on her own financial well‐being. Her financial planner takes the abstract and makes it concrete, helping her see the financial implications of paying her sister's rent. At this stage, a skilled financial planner is not lecturing Carmen, but rather using good listening skills, reflections, and summaries to help reinforce and support the client.

In this stage, if change happens, it will usually take place within a year. A client may be in the contemplation stage if they know they are spending their entire paycheck without contributing to savings, but they aren't ready to take an honest look at their spending and commit to cutting back. When a client is experiencing ambivalence, the planner should take caution not to be confrontational. The more confrontational or directive a financial planner is in this stage, the more likely they are to push the client further away from change. When a financial planner confronts a client who is ambivalent, they bring out the client's internal debate, making it an external debate, which a client is hard‐wired to fight against (see status quo bias). With every nudge for the client to make a change, the client will respond with an argument against it. This will reinforce the client's case opposing the change and make it harder for the change to occur.

3. Preparation

The preparation stage is all about getting ready to make a change. At this part of the process, the client may be seeking guidance or information and figuring out plans to make a change within the next few months. Resistance has faded and now the focus is on plotting out solutions and strategies. The client may be envisioning the life they want. Having a clear vision of a desired future and its benefits will add fuel to the client's intrinsic motivation for change, propelling them forward to the next level of the change process. If a client is in a financial planner's office asking about the next steps, they are likely at the preparation stage of change. Clients at the preparation stage are determined to make their financial health a priority. They are committed to doing things differently and ready to make a plan. Clients in this stage of change are looking toward the future, anticipating the ways their lives may improve once this problem is solved. This is often the stage at which a client may first engage a financial planner, and an ideal stage for the planner to make portfolio recommendations and help clients create a financial plan.

In the preparation stage, Carmen may be ready to ask her sister if she is feeling stable enough to pay her own rent in the next few months. They may even develop a tiered plan, so that Carmen is paying one‐third less rent in the next month, followed by two‐thirds less in the following month, and finally, giving her sister the full responsibility in the following month. Once Carmen is confident that her sister will pay her own rent, she can redirect that money to a retirement plan that she and her planner decide would fit best.

Although she is still not ready to take action, Carmen is not only aware of the issue but she is preparing herself to consider a course change. Her planner can offer support to help Carmen feel empowered. A skilled financial planner would also anticipate some of the obstacles that Carmen will likely face, including having what could be a difficult emotional experience in talking with her sister. This is where a financial planner might do some role‐playing with Carmen, where they might ask Carmen to play the role of her sister, and the financial planner can model how to broach the subject. With Carmen playing the role of her sister, she would then be free to act out all her deepest worries and fears about what her sister might say and how her sister might react. After learning how the financial planner might approach the conversation, they can switch roles and Carmen can practice having the conversation with her sister, while the financial planner plays the part of Carmen's sister.

4. Action

Preparation gives way to action in this stage of the process. The client is actively engaged in their quest for change and ready to put their plans into motion. It is important for a planner to be sure that the client is in the action stage of change before pressing for solutions. If a client is in an earlier stage of change around a given issue, the planner will likely fail to get the client to take action. People who feel pressured to change from outside influences (extrinsic motivation) don't usually follow through or stick with the changes they promise to make. Think about the elimination of any punishment or reward you have had in your life around a change you weren't motivated to make on your own. Once the “carrot” or the “stick” is eliminated, it is difficult to continue with the behavior. If you try to push a client through the stages of change too quickly, without going through the necessary preparation stage, they likely won't have the mindset and/or tools they need to change for good.

Most financial planning strategies assume that clients are already in the action stage. However, studies show that around any given issue at any given time, only 20% of people are in the action phase [157]. Planners have the most success with clients who are seeking advice, accepting, and appreciating the information, and are ready to act upon the planner's suggestions.

By this stage, Carmen has reduced her contribution to her sister's rent to zero and is setting up retirement accounts based on her financial planner's advice. She signed up to have her retirement payments automatically deducted from her paycheck before taxes and is looking forward to watching her savings grow.

In the action stage, Carmen is ready to receive and act on advice from her financial planner. This is the point where her financial planner should give advice, express their opinions, and offer solutions. Whereas listening without offering solutions may help at the precontemplation or contemplation stages, it would be counterproductive in the preparation and action stages.

5. Maintenance

Clients in the maintenance stage have an action plan in place and have implemented new behaviors into their everyday life. Depending on the nature of the change they made, this stage can take three or more months to achieve. The client has come to accept setbacks as a normal part of the process, and they have learned to navigate those setbacks so they don't derail progress. It may be helpful for the client to make a list of triggers that could lead to previous negative behaviors (e.g., overspending, financial enabling, making impulsive investing decisions), which can help the client proactively avoid them this time. For example, if a couple has a history of heated disagreements regarding money, part of the maintenance stage could involve preemptive periodic check‐ins to keep disagreements around money from exacerbating.

Carmen confided in her financial planner that her sister was struggling to pay her rent on her own, since she had become accustomed to the previous arrangement. Even though her sister's income allowed plenty of room for her to comfortably pay rent, her lifestyle was making it difficult for her to take on this new responsibility. She blamed Carmen for cutting her off and made her feel guilty for being “selfish.” Carmen's planner reminded her of the list of triggers that Carmen made at the beginning of this stage. At the top of the list was her sister's inability to support herself. The planner asked Carmen to look into the future and see what her life would be like if she stayed on the path of saving for retirement. This renewed Carmen's determination to stick with her retirement plan instead of giving into her sister, who could help herself.

The planner is a crucial asset to clients in the maintenance stage who want to sustain their new behavioral changes. Slipping back to old behaviors momentarily is a part of the maintenance phase. Clients can be reminded that small setbacks are expected and not an indicator that the changes are in jeopardy. Planners who anticipate these kinds of “relapses” can help clients understand that they are a normal part of the process, helping them avoid shame or regret.

6. Termination (or Integration)

This stage can also be described as integration. At this point, clients have integrated their healthy financial choices into their lives and have little desire to go back to their old ways.

Carmen visits her planner once a year to reassess her finances. Her retirement account is growing, and she is no longer living in fear of the future. Her sister curbed her spending and is now responsibly paying her rent without complaint, and their relationship is stronger than ever. Carmen wants to use this year's company bonus to make a new investment based on her planner's guidance.

This stage allows the client and planner to enjoy a long‐term relationship. The client will have confidence in themselves, knowing that change is possible, and trust in the planner, who has demonstrated their ability to help the client reach fulfillment in their financial goals.

Interrupting

Clients who interrupt are usually trying to signal that they are not feeling heard. If a planner notices that they are being interrupted, it could be an indication that they have been doing too much talking and not enough listening. Interruptions can also be a sign that the client is not ready to hear what the planner is trying to convey. Interruption can take many forms, such as abruptly interjecting while the planner is speaking, talking over the planner, or suddenly changing the subject.

Arguing

When a client starts arguing with the planner, it is an obvious sign that the client is resisting change. In this state, a client may call into question a planner's expertise or accuracy or become confrontational when the planner makes suggestions. In some cases, the client may even become hostile. The more skilled a planner is, the more likely it is that they will be listening for warning signs so they can steer the interaction away from confrontation well before it escalates into an argument.

Negating

This can be a flat‐out “no” or a justification for refusing to do what is necessary for change. Whenever the planner hears, “Yeah, but…,” they've wandered into negation territory. Negating shows that the client does not want to change and is digging in. It is a sign that the client is resisting the planner's advice. In this case, it is important for the planner to evaluate whether there is a discrepancy between the planner's agenda and the client's wishes. Negation can also manifest as blaming others for their situation, refusing to take responsibility, making excuses, or dismissing the planner's guidance.

Ignoring

If a client tunes out, shuts down, starts avoiding eye contact, or offers short responses that stop the conversation in its tracks, the planner is likely being ignored. If a client doesn't understand what the planner is saying, they may check out or pretend they know to avoid embarrassment. When a client checks out of the conversation, it could be an indicator that they are not ready to discuss the topic that's being presented.

Body Language

If a client is crossing their arms, leaning back in their chair, frowning, avoiding eye contact, or shifting away, it could be a sign of resistance. It's important to note that these body signals may not always be about resistance. For instance, a person who is on the spectrum may struggle to make eye contact. Someone may cross their arms when they're cold. Body language is one element in a broader picture of client cues.

1. Simple Reflection

Like a mirror, this technique involves reflecting the client's statements and assertions with as much accuracy as possible. The planner should be selective about which parts to reflect to the client, often choosing the things the client says that are in support of the desired change, when they are offered by the client. Financial planners can reflect back a statement or an emotion that the client is sharing. Properly selected reflections will help the client feel heard and understood, gain insight about the discrepancies between their actions and their goals, and realize the consequences they will face if they don't change their behaviors.

2. Complex Reflection

With complex reflection, the planner takes an educated guess about where the client is going with what they're saying. It can feel like trying to complete the client's sentence. If it is accurate, the client feels even more understood. If it is inaccurate, the client can correct you and get to the heart of the matter.

3. Amplified Reflection

A planner using this technique will reflect an extreme version of the client's message. It's human nature to correct an exaggeration. Through the client's tendency to correct the amplified reaction, they often find themself arguing in favor of making the desired change, rather than fighting against it. If the client agrees with the amplified reflection, it just serves as a complex reflection but shows the planner how adamant the client is about maintaining the status quo. Planners should use this technique with caution and discretion. While it can be powerful, if implemented incorrectly, it can come off as condescending or sarcastic. Empathy and genuine concern should be at the forefront when using this reflection tool.

4. Double‐Sided Reflection

This technique can help the clients explore the pros and cons of taking action. When the planner reflects both sides of the client's ambivalence, the client is liberated from feeling pressured to argue for the status quo. In addition to meeting the client where they are, smack dab in the midst of their struggle, a double‐sided reflection works as a type of experiment. The client will often pick up the side of the argument they are feeling most attached to at that moment. Often this technique can help a client look at the pros and cons of taking action more objectively. Our favorite way of using this technique is visual, with our hands:

5. Shifting the Focus from What's Not Working to What Is Working

When a client is showing resistance to a financial planner's advice, sometimes it makes sense to shift the focus away from the impasse. When a person is hyperfocused on maintaining the status quo, it might indicate that they are in a precontemplative state of change. When a financial planner deems that little progress can be made at the moment in moving the client toward taking action, they can simply change the subject, and focus on an area where success is more likely to occur. The planner may decide to revisit the topic at a later time, perhaps after they have enjoyed some success in the relationship with the client, who has taken action in other areas of the financial plan.

6. Reframing

When we are feeling stuck, it can help to look at an issue from a different angle. With the technique of reframing, we are attempting to offer up an alternative meaning to a situation. By looking at an issue through a different lens, clients may be able to better receive new information and can generate new solutions. This is a “thinking outside the box” technique that can offer the client an opportunity to get unstuck in their thinking. Reframing is an advanced technique that may not come naturally to a financial planner at first but is a skill that can be developed over time. In the example we have been using throughout this section, we might assume that the client has some self‐awareness that they have made a mistake by getting out of the market. They may even have some regret and feel embarrassed or bad about their previous decision. In the following reframe, the financial planner attempts to cast the same situation in a different light, perhaps reducing the client's feelings of regret, and spark change by highlighting that the client is wiser and stronger after having had this experience:

7. Agreement With a Twist

People relax when they feel that others agree with them. They aren't as determined to prove a point and that makes them more open to receiving what others have to say. This technique involves agreeing with the client and then adding a twist that will redirect the client away from resistance. In other words, it combines agreeing with the client and normalizing their experience, followed by a reframe. When the client feels validated, they are more willing to accept new ideas.

8. Emphasizing Self‐Determination

Nobody likes being told what to do. When a financial planner notices signs of resistance in a client, it might make sense to honor and support the part of the client that is seeking to gain control and assert their independence. Clients who feel like they are in control and in charge of their choices will be less resistant to change.

9. Arguing Against Change

This powerful technique may seem counterintuitive, but it can be quite effective when used at the right time and delivered skillfully. This is not like reverse psychology, which is used to subtly encourage people into choosing the thing they are resisting. Arguing against change can take several forms, including “go slow” messages, which, paradoxically, often make people want to move faster. The planner must be willing to support the client's choice against making a change that could improve their lives, trusting that the client is making the decision they think is best for them at this time. If the planner perceives that the client is being motivated by external forces, like appeasing a demanding family member, this technique may guide the client back to their intrinsic motivation. Siding with the client's opposition to change can externalize their ambivalence in the opposite direction, with the advisor taking the side of maintaining the status quo. It may even help to remind them why they decided to seek the help of a financial planner in the first place.

H.68. Principles of counseling

1. Explain the applications of counseling theory to financial planning practice.
2. Demonstrate how a planner can develop a relationship of honesty and trust in client interaction.
3. Select appropriate counseling and communication techniques for use with individual clients.