As adults, we're pretty good at spotting peer pressure among kids. But I think we're a little blind to the peer pressure we experience as adults. We even call it a different name. We're just doing "research." We're not doing something just because everyone else is doing it. After all, we're grown-ups. We know our own minds.
That all sounds good, but the reality for you, me and anyone else who qualifies as human looks a little different. Even with the best intentions, we can get caught up in what we see and hear around us and react to those external forces. In your role of real financial adviser, you have the opportunity to serve as a buffer for your clients when it comes to peer pressure and investing.
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So what should we do when clients want to make big changes and it's clear the reasons have nothing to do with their values or goals? Start by listening with empathy.
You may think I'm being too cautious. After all, they're paying you to give them advice. But think back to the last time you wanted to do something and someone else said, "That's crazy." I'm guessing you didn't pay attention to what that person had to say after that point. You don't want that to happen with your client.
Listening with empathy gives you room to hear what your clients are saying. You can then acknowledge the fear, the excitement or even the uncertainty that sent them to you looking to make a change. That matters to people. It also creates the perfect opportunity for you to remind your clients about their goals and the plan you developed around those goals.
"Let's take a look at your plan. Based on the goals you outlined, you're on track to reach them. Have those goals changed?"
The answer is usually, "No." It then becomes easier to walk people back from the edge.
"When we built your plan and designed your portfolio, we did so to give you the highest likelihood of reaching your goals," you say. "Now, if your goals and values change, of course we should adapt your plan and portfolio to those changes. But we don't want to change just because everyone else is doing it."
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Your clients may still insist on reacting to what everyone else is doing, and there's not a whole lot you can do about it. But in my experience, listening with empathy and reminding people of their goals almost always stops them from jumping off the proverbial cliff.
Carl Richards is a certified financial planner and the author of the weekly "Sketch Guy" column at The New York Times. He published his second book, "The One-Page Financial Plan: A Simple Way to Be Smart About Your Money" (Portfolio), last year. You can email Carl here, and learn more about him and his work at BehaviorGap.com.
