Change is an important part of everybody’s life. If it were not for change, the world would not be the way we know it. A.J. Schuler discusses the main reasons why people are apprehensive about forming new habits and adjusting current ones in his article, “Overcoming Resistance to Change: Top Ten Reasons for Change Resistance”. Change can be trying and difficult for many people; and there are numerous different reasons why it can be so challenging for individuals.
Resistance is typically found in reason 1 of the article, because the client is entering the unknown on the basis that it will be better. There is no evidence to clearly state they will be better off; the client is taking a leap of faith in the so-called right direction. This can potentially prevent or stop change because the client does not feel as if the risk and fear in the transition is worth the outcome. For example, if a client spends their entire paycheck every month to pay their bills and living expenses (never putting any aside for an emergency account, health insurance, or a retirement account) they might view the notion of saving as risky because it would impact their already tight budget, causing hardships. This is when a financial counselor needs to step in and explain to the client that it is not “Can they afford this?”, but it is “How can we afford this?” By discussing the potential hazards or creating a pro-con list, the client might soon see their risk level from the same viewpoint as the advisor.
Reason 3 causes a lot of people fear by having to adjust to new changes alone and without believing in it. This prevents the change from becoming successful, because there is not enough trust in the new technique or in executing it properly. If an advisor only tells a client that they need to start saving 15% of their salary each month for a retirement fund, the client might not follow through with the plan. This would be due to the lack of description and reasoning from the advisor, along with the client not understanding why this is necessary and how it is possible based upon their current expenses. To be an effective advisor, it is important to thoroughly describe and explain the change you are asking of in a client. Demonstrating with a mock investment plan will provide a great visual tool that will also foster a belief in the new plan to further encourage the client that they can be successful.
According to reason 5, if people feel exhausted or stressed their commitment level to a change is going to plummet. This prevents change because they are too fatigued to put forth the effort of committing themselves. If a client comes to an advisor during a financial crisis they will most likely resist the change because their fatigue factor will prevent them from moving forward. The client is reaching out, so they are in the contemplation/preparation stage of change. This is because they have accepted that they need help and are starting to look for an action plan to move in the correct direction. In this scenario it is extremely important for the advisor to continuously motivate and praise the client for the steps they are taking and the changes they are trying to implement. Allowing the client to vent some of their stresses and being patient while they do so is vitally important as well. At this stage it is extremely easy for a client to revert back to their old ways because it is what they are used to and it is easy.
There are multiple stages of change and numerous reasons why people are resistant to change. The important thing for all financial advisors is to take the time to understand and listen to their clients. By allowing the client to discuss their apprehensions, goals, and reasons, the advisor will soon be able to determine where they stand in the stages of change and what main factors are causing their resistance. Once that is determined, building an investment plan around the needs of a client while implementing positive change techniques will help ensure a higher retention rate of clients, along with a higher success rate of meeting goals.

Summary by Kaitlin Navarro

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