Expert shares tips on helping a client in financial difficulty
Amid soaring costs, rising rates and uncertain economic conditions, consumers of financial products might feel a sense of panic. It can also affect those to whom they turn for advice.
That’s according to later life mortgage expert Dan Osman (pictured). This stress, he said, could have an adverse effect on both clients and advisors.
“Advisors in the world of later life finance are often drawn by the desire to help and support their clients,” said Osman, who is an advisor at mortgage broker UK Moneyman. “To elicit the client’s story, an advisor will often discuss the techniques involved including the need to demonstrate empathy, active listening, paraphrasing etc.
“Ultimately, however, client and advisor form a relationship which can be very positive and supportive. It can also be detrimental to both.”
Osman said that a useful perspective from which to view this underpinned the psychotherapeutic theories of transactional analysis developed by psychiatrist Eric Berne in the 1950s. The fundamental tenet was that each individual existed with three ego states – parent, adult and child.
According to Berne, the parent ego state was largely influenced by our experiences as children, faced with authority, and was broadly judgemental in nature. In the parent state, our language could include a lot of ‘shoulds’ and ‘should nots.’
The child ego state related to our experiences as children, and could lead us to revert to our feelings and behaviours from that stage in our lives. Both parent and child ego states were divided into two parts.
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“The critical or controlling parent state is where we use the voice of authority and can be both disapproving and coercive, which can be perceived as aggressive and may adversely affect the decisions made by a vulnerable client,” Osman explained. “The nurturing parent state is more supportive. However, in this state, it is more likely that an advisor may adopt the position of rescuer, wanting to soothe and ‘make things better’ which can be disempowering for clients and is an inappropriate way to talk to another adult.”
Talking about the two parts of the child ego state, Osman said the ‘’free child’ was a joyful state characterised by spontaneity, playfulness and pleasure seeking. However, it could also be linked to risk taking and poor financial decision-making, based on short-term goals.
The ‘adapted child’ was someone who conformed to the wishes, ideas, or direction of others to win approval and be liked. Osman explained that the risk with vulnerable clients in this state was that they may not express their needs and wishes clearly for fear of disapproval from the ‘critical parent’.
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The third ego state – the adult ego state – was not subdivided and was the state individuals should aspire to be in their interactions with others.
“It is a state of openness and mutual respect in which we are less likely to be judgemental and more likely to have healthy social and professional relationships,” Osman said. “When considering vulnerability in the client/advisor relationship – or indeed any relationship – it is important to consider the phenomenon of induction. This refers to how one person’s behaviour induces a response or change in behaviour of the person they are talking to.
“A client in distress using language like ‘I don’t know what to do’ may well induce either parent reaction in the advisor (to rescue or criticise), neither of which will produce the best outcome.”
The mortgage expert stressed that in these uncertain times, it fell to the advisor to maintain the adult ego state and interact with clients in the context of the ‘here and now’, pragmatically and without judgement.
“The benefit of this is that it often induces the same state in the client, which can not only reduce the situational vulnerability of a client in financial difficulty anticipating judgement, but is the best foundation for a useful and productive professional relationship,” Osman concluded.
