Kitces: Simplify Decision-Making For Clients By Shifting The Perspective To Their Future Selves (December 14, 2022)

Kitces has made available for download their article, “Simplify Decision-Making For Clients By Shifting The Perspective To Their Future Selves”, published on Kitces. The Executive Summary is as follows:

Change is difficult, and when faced with the prospect of a change, many people opt to stick with the status quo. This is even true in the case of positive changes, such as a new job opportunity or relationship: Even though it might be very likely to make the person’s life better, it represents a departure from life as usual, and there is always the risk that the change won’t work out the way it was expected to. As a result, people are often reluctant to make decisions when doing so would result in a significant change; this can result in ambivalence about taking action to make improvements in one’s life – including the types of financial decisions that advisors work with their clients to make.

Advisors encounter this ‘status quo bias’ with clients who resist taking action on recommendations. Even though the client may agree with the advisor on the action they should take and understand the steps they need to follow, they might still hesitate to follow through on the strategy. And while it can be tempting to chalk this up to forgetfulness, disorganization, or a failure of the client to be fully convinced that the strategy is right for them, the client’s hesitation to act is often the result of their ambivalence and fear around change.

What’s often challenging for advisors in helping a client overcome their ambivalence is that the client is often already aware that their feelings may be irrational, so simply trying to convince them via numbers and logic might be counterproductive: the client doesn’t need to be persuaded that the strategy might be in their best interests; rather, it’s helping them come to terms with the emotional aspect of the decision. And so spurring the client to take action often requires the advisor to focus on helping the client work through their emotional response to the prospect of change.

While discussions around emotional topics can be difficult because of the likelihood of triggering a strong emotional reaction, one method that advisors can use to help their clients overcome their resistance is to ask them what their ‘future self’ would think about the decision. This reframing invites the client to imagine themselves after they have already made the change under consideration – effectively shifting the ‘status quo’ from the client’s current state to their hypothetical future self. And once the client is in that future frame of mind, they can view the decision as if it were in hindsight rather than as a change yet to come – allowing them to temporarily bypass the emotions tied to the change and helping them focus more objectively on the features of their life that are truly meaningful to them!

The key point is that, when entertaining and planning for a new idea or opportunity (e.g., a new job, house, or phase of life), it is common to just keep doing what we are already doing – and when what we are currently doing is working well enough, the emotional ‘cost’ of change often outweighs the potential benefits, even if the new opportunity is truly better. Asking the client what their future self would think can bring in a new perspective, helping to overcome emotional ambivalence in a non-invasive way.

To read the full report, click: “Simplify Decision-Making For Clients By Shifting The Perspective To Their Future Selves”

Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.

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