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How to Use the Transtheoretical Model of Change to Motivate Clients

By Taylor Liao, CFP

Have you ever experienced clients who appear happy to see you, listen carefully to your suggestions, and then don’t make any of your suggested changes? Why does this happen? You did everything right: you studied the clients’ financial situations, analyzed their data, and provided a comprehensive suggestion. All they had to do was follow the steps you provided and achieve their goals. So, why didn’t they make the changes they promised they would?

The Importance of a Strong Client Relationship

I have observed that some financial planners, especially newcomers, have difficulty maintaining client relationships. They focus too much on the data and analysis as opposed to the client. This style leads to clients who are unmotivated and financial planners who don’t fully understand their clients. The result is clients with low satisfaction. Financial planning is more than complex calculations. The key to financial planning is linking the calculations to clients’ lives and dreams. Clients might lack trust in financial planners if they don’t understand the process of financial planning. In fact, clients might find financial planning is worthless and think they don’t need it because planners don’t do a good job explaining the financial planning process in the introductory meeting.

The best way to build client trust is by listening to clients and motivating them to make change step-by-step. Great financial planners are great motivators as well; they know that clients are inspired by their own desires. The desire of making their dreams come true can drive them to reach their goals. Planners who only talk about numbers and calculations aren’t inspiring and will struggle to earn the trust of clients.

The Transtheoretical Model of Change

The Transtheoretical Model of Change (TTM) is a theoretical model of clients’ behavior, emotions, and cognitions during the financial planning process. Financial planning is actually a process of the TTM. After planners have done analysis and given clients comprehensive suggestions, they hope that clients will make changes, such as controlling their spending, saving regularly, etc. Since financial planners cannot be with their clients at all times telling them to control their spending or save more, it is very important that they communicate why making these suggested changes are so important. Once clients are convinced of the why, they will follow your recommendations and fulfill their goals.  If this happens, they will be very satisfied, trust you, and continue to work with you and recommend you to other people.

The Transtheoretical Model of Change includes five steps:

Precontemplation: Clients are not intending to take action in the foreseeable future, because they are uninformed or under-informed about the consequences of their behavior.

Contemplation: Clients are intending to change in the next six months, they are more aware of the pros of changing but are also acutely aware of the cons.

Preparation: Clients are intending to take action in the immediate future.

Action: Clients have made specific overt modifications in their lifestyles within the past six months.

MaintenanceClients are working to prevent relapse, they are less tempted to relapse and increasingly more confident that they can continue their change.

Clients are typically in the pre-contemplation stage when you first meet them. They are not aware of the advantages of financial planning and why they need a plan right away. They don’t feel it is an urgent matter to make a plan to change their financial situations. To build trust in the beginning of relationships, financial planners should explain the difference between financial planning and product-selling and how that affects clients.

Asking the Right Questions

The most important stage in the TTM process is contemplation, in which people are “intending to make changes in their lives”. Financial planning clients must have in mind either a goal they want to achieve in the future or a financial problem they are facing. The situation clients are in are what power them to make changes in their lives. Before financial planners begin analysis, they should have a deep understanding of why clients need a financial plan. Here are a few questions that can help planners better understand clients’ motivations:

  • What motivated you to do financial planning?
  • What will be the major achievements in your life?
  • Why is financial planning important to you right now?

By asking these types of questions and listening carefully, financial planners can determine if clients have intentions to make changes in their lives. The most important factor in having a successful financial planning relationship is that the motivation comes from the clients’ desires, not the planners’ instructions. It is the financial planner’s job to explain to clients the role of the planner is to provide suggestions and coach clients and 99% of the modifications made in the clients’ lives must be accomplished by them. Clients must understand this concept, believe that their plan can work, and be willing to follow the instructions given by their financial planner. This is the only path to success.

During the action stage of the Transtheoretical Model of Change, financial planners should help clients by making it clear and simple how the clients should follow their recommendations to them. The K.I.S.S., or “keep it simple, stupid” principle can be used to narrow data down to only high-level information that clients needs to hear. It is important to translate professional or internal language into simple steps that are easy to follow. Lastly, it is the financial planner’s job to monitor clients’ progress on a regular basis. Not all clients are disciplined enough to implement recommendations given by financial planners without constant support.

Client Trust is Key

A recent survey, Edelman Trust Barometer Global Result, reported the percentage of global trust in financial services industries dropped from 48 percent to 45 percent, according to interviews in 25 countries. In a section titled, Businesses Not Meeting Public’s Expectations, there is a table that shows the top ways to build consumer trust and the gap between business importance and company performance:

Listens to customer and feedback -31%
Places customer ahead of profits -36%
Has ethical business practices -29%
Has transparent and open business practices -33%
Communicates frequently and honestly on the state of business -31%
Takes responsible actions to address the issue of crisis -34%

If clients judge us using these criteria, how can financial planners improve their client relationships, so they can successfully motivate them?

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