How to Get Clients to Spend Their Money

They have all the money they could ever need and still don’t sleep at night watching the news following the economic and political turmoil and wondering how it will impact their accounts. The clients I am talking about are not young – they are in their 60s, 70s and in a couple of cases their 80s. I know people can live well past 100 (my mother lived to 101.) They have money at 80 that might need to last 20 years. But trust me when I say there is plenty in the accounts I am referencing and without seriously catastrophic events (that wipe out everything for everyone), these clients will be fine.

I know it is their money, their lives and their decisions and I respect this. But at some point they will regret being quite as conservative as they are, and they will wish they enjoyed some of this wealth while they were still able to do so.

Is it possible to change someone’s mind in this area? Do I give all of my clients a copy of Perkins’ book for a holiday gift? Or do I admit I’ve done my best to share a perspective and ultimately it is up to them to decide what to do with their wealth?

D.K.

Dear D.K.,

The only answer is the last bit you wrote in your note: It is ultimately up to them to decide what to do with their wealth. But that doesn’t mean you can’t share insights and help them consider a different viewpoint.

I’ll liken some of what is happening here to parenthood – those of us who have been there and done that know the trials and tribulations that can arise from making certain decisions. You do your very best to try and help your child see what comes of making bad choices, and from time to time they might not consider what’s best for them. You do your best to share your perspective, give them information and articles and maybe have them talk to someone else who has had a bad experience. And yet. Yet, they do what they shouldn’t do and learn themselves it is a mistake.

Sometimes in life, with clients who are grown-up, you can share your perspective, information and articles, cash-flow projections, facts and data on their current situation and run models for worst-case scenarios, and they still make a different decision than the one you believe is best.

I am going to suggest some things you could do to help them see another perspective. But whatever you do, understand you might not be able to get through.

Before you give up, try the following:

1. Tell them stories about other clients who had regrets later in life about not spending. I was talking with a woman not too long ago, 96 years old and in excellent health, who was sharing her regret that when her husband was alive (he died nine years ago), they always talked about taking their children and grandchildren on some sort of exotic trip. They had plenty of money, many millions of dollars, and her husband always wanted to keep hundreds of thousands just sitting in a checking account. They were well able to do it. He was so worried about giving this money up that they never got around to planning the vacation. She has deep regrets and blames herself for not pushing him harder. This is a true story that made me think deeply about what else I could be doing for my own children, and you probably have many from your clients too. Stories are a great way to get people to think about something differently because we can relate and empathize with the person or people in the story.

2. Do a brainstorming “what if” session with your clients. You have done the financial modeling. But maybe you need to do more qualitative “what-ifs.” What if they spent money visiting the grandchildren and while they were there, the market declined by 20%? Would they still be happy to be with the grandchildren? What if they took the cruise they wanted to take and while they were gone their portfolio dropped somewhat and they came back to less in their accounts? Combine the financial scenarios showing them they are fine with the experience aspect and ask how they’d think or feel enjoying themselves. Chances are the experience would override the upset over losing a bit of money from market movements.

3. Consider whether there is an allocation you could put into a money market or cash/savings account that is earmarked for “fun.” Maybe if you just took the money out of the retirement or long-term savings and held it differently or had them hold it outside of their accounts, they would de-link them in their minds. I’m not a financial advisor, but I know many people who benefit from having their buckets of money so they can watch one for retirement, another for fun, another for legacy and so on. It sounds like they don’t separate their finances out at all so this could be an option.

4. The book could be a good idea for a gift. Combine the book with a brochure for some exotic trip they could take, or point them toward certain pages or chapters to make it more personal. The book struck you as important, as did my article, so again don’t count on this changing the mind of your client. But it’s always helpful to have a third party validating something you have been telling someone else.

It’s wonderful you care enough about your clients to try and prevent regrets for them. But you can only do so much and then what they decide to do with their lives – and their wealth – is ultimately up to them.

I keep this mantra in my firm. We tell clients what we believe is best for them, we show them how important taking a certain step might be, and we try and warn them against something we’ve seen with another client. But we respect they have to live with the decision, and we are limited in what we can do. It can be hard if you believe strongly in what you are recommending, but it is reality of your situation!

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. The firm has won the Wealthbriefing WealthTech award for Best Training Solution for 2022 and 2023. Beverly is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. She is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out our most recent white papers.

Read more articles by Beverly Flaxington