Allow Clients To Be Emotional, Advisors Told

Give your clients permission to have emotions as they deal with their finances during this time of COVID-19 pandemic and stock market volatility, a behavioral finance expert said Monday.

Jamie Hopkins, director of retirement research at Carson Group, a national wealth management firm that offers coaching and partnership to financial advisors, spoke to members of the National Association of Insurance and Financial Advisors at an online Town Hall Meeting.

Hopkins discussed how to deal with clients’ emotions as they focus on short-term and long-term financial goals during an unprecedented time.

“You have to give your clients permission to feel what they’re feeling,” he said. “Over the next month to three months, they will be dealing with a lot of uncertainty.”

Hopkins said the No. 1 challenge for advisors right now is to give clients permission to contact them and work with clients through “the new normal.”

Client emotions play a big part in decision-making, he said. “Rational decisions require emotional data. Focus on short-term decisions and keep them aligned with long-term desired outcomes.”

Keeping or trying to keep emotions out of a decision can be disastrous, Hopkins said.

Rational decision making requires emotions from our brain, he said. Most of behavioral finance and behavioral research is designed not around removing emotions but using them in a system that drives better outcomes. People want to continue to feel in control of their decisions, so nudges and systems that encourage strong behavior work well with clients.

Hopkins told advisors to help clients list their biggest concerns for the next

• Month
• Three months
• Year
• 10 years.

Then work with clients on a plan to address the 1- to 3-month goals while walking them back out into their longer-term thinking.

“We can keep people focused on their long-term goals when the short-term is what’s on their minds right now,” he said.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

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