When doctors see that you are gaining weight, they cannot force you to change your eating habits. They can only force you to shape up. The same goes for financial advisors who see you spending beyond your means. They can’t force you to stick to a budget. They can only make you think about how you save and spend, and consider the consequences of your actions.
“Getting angry doesn’t work,” says Michael B. Hansen, a certified financial planner in Walnut Creek, California. “At the end of the day, you may hear the customer say, “Hey, that’s my money. I can do what I want.”
That leaves advisers with a menu of options to convince spenders to cool it. The most obvious strategy is to remind clients why they hired a consultant in the first place.
“You’re paying me to help you stay financially healthy,” an advisor might say. “Part of my job is to let you know when you’re putting your financial health at risk.”
In these situations, the advisor becomes a kind of accountability partner—a coach who motivates spenders to avoid breaking their budget. Both sides know their role.
But it doesn’t always work out. Clients can still resist authority even if they pay that authority figure for advice and expertise.
Another tactic to stop people from overspending is to step back and focus on the big picture. Advisors try to put short-term costs into the long-term. During his first meeting with new clients, Hansen likes to ask: “What do you want your legacy to look like?”
The discussion then turns to the individual’s most cherished values. This sets the stage for further worries about overspending. Hansen reminds them of their stated values and adds: “If it’s still important to you, I suggest you hold back on spending.”
“It usually works out well,” he said. “We go over how they want to be remembered. Then they say, “I’ve been out of sight lately.”
Making customers more aware of their spending is instructive in itself. Many people operate in a vacuum, not realizing how they are using their funds and how much they are wasting on fluff.
“Tracking your expenses is important,” says Kelly Sand, co-founder and senior vice president of Francis LLC, a consulting firm in Brookfield, Wis. “It downloads all your transactions to see where you’re spending your money. It is surprising to many. They may not pay attention when they use their credit card.”
Careful advisors also identify who might influence a client’s spending decisions. For example, a big spender may be trying to keep up with materialistic colleagues, friends, or family members who buy expensive toys.
Experienced advisors also know to avoid “should statements.” Telling someone “You shouldn’t have bought that” or “You should be more disciplined” tend to be defensive rather than appropriate.
“You don’t want to say, ‘You have to cancel that streaming service,'” Hansen said. “You want them to figure it out for themselves as opposed to telling them what to do.”
More. How to know if you are living with a “money avoider”.
Read also: Should couples combine finances or keep separate accounts? Research finds that either option leads to a happier marriage.
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