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Wednesday, February 22, 2012

Effective Communication in Financial Planning: What I learned at NASI’s Annual Conference

Justin C. Smith

Financial planning is a young and growing profession that should be in more demand as a result of recent economic turmoil; people need planners to serve as an objective source to guide their financial behaviors. Planners, and clients alike, must be aware of social insurance because these programs affect financial assumptions and projections regardless of socio-economic status. Social Security, in particular, has become a major focal point for planners and clients because the amount of benefits received will determine the amount a client needs to set aside in a savings vehicle (e.g., IRA, mutual fund, money market account, etc.). NASI’s 24th annual policy research conference, Social Insurance in a Market Economy: Obstacles and Opportunities, explored the ways that social insurance programs contribute to a vibrant economy and I found the discussions very useful to my work as a financial planner.

Communication is a key component of financial planning that sets planners apart from other facilitators, such as therapists or advisors. Financial planners are not only planners of personal finances, but have now begun to brand themselves as life planners. Planners focus on their clients holistically--considering the emotional, financial, and physical--in order to guide them financially. Drew Westen's presentation at the NASI conference on “Messaging Social Insurance” was particularly relevant to the role of a financial planner and was a major highlight for me at the conference.

The way in which a financial planner frames a subject can have positive or negative effects on a client's perception of that subject. Through my work at the Aspire Clinic at the University of Georgia, a clinic that provides counseling services from collaborative disciplines to the Athens area and surrounding communities, the word 'budget' has been a troublesome topic to discuss with several of our clients. The term ‘budget’ holds a restrictive connotation to some, which is the opposite of its intended meaning; a budget should be a tool—not an obstacle—of goal attainment. One of the major takeaways from Mr. Westen's presentation is that framing and word choice matter and this has been evident in practice at the clinic. For those clients who are discouraged by 'budgeting,' we use alternative wording such as 'spending plans' or 'goal diaries.' This isn’t just about semantics; these language adjustments have proven successful, with increased client follow-through and enthusiasm for financial recommendations.

As a growing discipline and industry, financial planning is constantly trying to revamp delivery techniques and use research to make meaningful recommendations to clients. Lessons learned through the study of psychology, for instance, have shown that coherent and memorable stories have been proven to aid in learning. These types of stories help financial planning clients to understand the framing of financial concepts that may be otherwise difficult to comprehend. Planners can use this method to connect with clients, raise concerns about financial well-being, and finally, conclude on a hopeful note to help clients understand the planning process. Westen also convinced me that when I, as a financial advisor, make client recommendations, I must be confident in my delivery and know what networks I am activating.  Human behavior, according to Westen, is motivated by emotion; therefore, if a client doesn't feel that the planner can effectively help them, they will be less likely to follow through with any recommendations or advice.

  NASI’s 2012 conference was such a great experience for me as financial planning major, not only because of the value of the knowledge gained, but also because of the professionals in attendance. Participants provided interesting discussion and contributed great questions about the future of social insurance and where we go from here. I have already recommended to colleagues that they attend next year's meeting. No matter what level of understanding or experience they have with social insurance, my colleagues are sure to have an enriching experience because of the connection between social insurance and financial planning.


Justin Smith is completing a master's degree in financial planning at the University of Georgia. Justin has prepared tax returns for community residents as a voluntary income tax assistance (V.I.T.A) volunteer. It was through his involvement with V.I.T.A and his recent commitment as a financial counselor that his interest in social insurance peaked. Justin was one of six students and young professionals awarded a scholarship to attend NASI’s 24th annual policy research conference January 26-27, 2012, in Washington, DC.

Posted on February 22, 2012  |  Write the first comment
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