Planners need to understand client grief

Financial planning clients are grieving because the global economic crisis has shattered their dreams, Conscious Money principal Wayne Lear has warned.

“Advisers have got to understand what clients are going through, grieving due to the financial crisis,” he said.

“But financial planners have the skills to deal with these emotions.”

Lear said there were a number of emotions clients will be experiencing and they will unload these onto financial planners.

The first stage has been denial of what has happened to their wealth and they have withdrawn from social contact due to shame, he told the Kaplan Financial Adviser Roadshow in Melbourne.

“Then they experience anger and will be looking for people who have inflicted the hurt,” Lear said.

“They will also blame themselves, although I have one client who blames me for the whole crisis.”

The next stage is asking the planner to make things better, but that involves some payoff, such as belt-tightening if they are living off their retirement income.

After this, clients feel depressed, which Lear said is dangerous.

“The client feels numb, with anger and sadness remaining underneath,” he said.

“I offer a personal service to all clients, but when they all ring at once, it is hard to offer that service, which depresses them further.”

The final stage is for clients to accept the situation and their loss.

“A lot of clients now realise it wasn’t the planner’s fault,” Lear said.

“But some won’t accept it and continue to blame the planner.”

Clients will continually need to be reassured about the future and kept informed of what is happening, sometimes twice a week.

“Also tell the client that they are in a decision-free zone, which means not making any rash moves regarding the portfolio,” he said.

“Times have changed and things will get worse before they get better, so they have to go through the grieving process.”

Lear said it was important not to allow fear to develop which will negate any rational decision making.

“We are all in this together, the planner and the client, as we all have lost money,” he said.

“Basically we are a counselling service and it is important to acknowledge what the client is feeling.”