The 5 most revealing questions advisors can ask their clients

June 28, 2022 7:32 PM

By asking the right questions, advisors can learn a lot about how their clients think about money.

When getting to know a client, some questions dig deeper than others. Oddly, sometimes it’s the least direct ones that reveal the most.

Behavioral finance, the study of how psychology affects markets and investors, can shine a light on which inquiries will get to the root of clients’ motives. Advisors who take this approach use deeply personal, reflective questions to get a sense of their clients’ fears, desires and habits — good or bad — with money.

Financial Planning asked four such advisors to share their favorite, most illuminating questions. Here’s what they’re asking:

What is your earliest memory of money?

Nicole Cope, head of advisors at Ally Wealth, asks this question to find out what emotional biases might be influencing her clients’ decisions — even if they date all the way back to childhood.

“What that usually uncovers from the conversation is really how money was viewed in the household,” Cope explained. “In some households, money was in abundance. In others, it wasn’t. It could have been used as affirmation or love, or it could have been weaponized.”

After the client reveals this foundational memory, Cope asks a follow-up question: “How do you think that impacts the way you make decisions today?”

The answers can be surprising. Memories of scarcity can lead to more risk aversion, or just the opposite — if the client “rebels” against the strict controls of their upbringing, they may spend too freely as an adult. The role of the advisor, Cope said, is to help “navigate through or around” that bias.

“It's rare that the advisor will really have the time or the education to help them overcome it,” Cope said. “But as long as there's awareness, then the advisor can set up guardrails to help the clients get around it. That will be beneficial in the long run.”

Sonya Lutter, director of research at Herbers & Company, takes it one step further. In addition to describing their memories, she has her clients sculpt them out of Play-Doh.

“It provides a distraction and tends to stimulate childhood memories,” Lutter said. “Not a single client has questioned the approach — it turns out that if we are willing to introduce new ideas, clients are willing to try.”

When is money ever a source of joy?

Jacquette Timmons, CEO of Sterling Investment Management, said the less explicit a question is, the more details it draws out. Her favorite: When does money bring her clients joy?

“It reveals people’s priorities without you having to ask, ‘What are your priorities?’” Timmons said.

Responses have included specific joys, like travel or “giving to others,” while others directly answer the “when” question: “when I’m able to purchase things or experiences,” or “when I make a lot of it.”

It’s also informative, Timmons said, when a client has no answer.

“Some people actually do have a hard time answering the question because they don't ever experience it as joy,” she explained. “It is just entirely a stressful thing for them.”

That information tells Timmons where to “tread gingerly,” but also lets her know what kind of coaching will be necessary to overcome the client’s anxiety.

“If you don't ever find any joy out of it — especially if it's something that you have to come into contact with on a daily basis — it's going to be hard to feel like you can be in control over how it impacts you,” she said.

How do you like to spend your days?

In addition to remembering their childhoods, Lutter asks her clients to envision an ideal life in adulthood.

The CFP said she frames the question in a specific way: “not necessarily how they actually spend their days, but how they would like to spend their days if given the chance to do anything.”Asking this reveals the client’s values, she said, and starts a conversation about how to plan a future around them.

“For instance, a person who likes to read on the beach values leisurely time and planning for regular vacations will be a good idea,” Lutter said. “A person who likes to spend their days working on hobbies may need more funds allocated to support those goals. A person who struggles to think of how they like to spend their days outside of work values their professional identity and may find it difficult to ‘retire’ and make account withdrawals.”

What's your finish line?

Jeff Shafer, CEO of CommonGood Capital, said he asks about a client’s “finish line” in order to get at a more basic question: “How much is enough?”

“It shows how they define success,” Shafer said. “It shows when they at least think they will be at peace, at financial freedom.”

Once the client puts a dollar number on their goal, Shafer asks them to explain the reasoning behind it — and that’s when the answers get interesting.

“It puts it into real terms of what is important to them,” he said.

One client might want to leave $2 million to her grandkids; another might want to leave $1 million to his school.

“It allows them to dream,” Shafer said. “Even though they may not be there yet, it allows them to get to that point of success in their mind and go, ‘how would you act? What would you do with it?’”

…And what else?

Another question Cope recommends is her favorite three word follow-up.

“I think most advisors would learn so much from a client if they just simply continue to ask, ‘And what else?’” Cope said.

Pressing for more information, even after a client has “finished” answering a question, is key to how Cope gets to the root causes behind their choices.

“When an answer is provided, it's usually very much a surface answer,” she said. “Perfect example: What are your goals? ‘Retirement.’ OK, right. There's a lot that goes into retirement, so that ‘and what else’ is forcing the client to go beyond the surface level.”

Cope said this question is especially handy when a topic is emotional, or when the client seems too intimidated to be fully forthcoming. It also underscores a deeper truth: In addition to asking good questions, the best way to understand a client is to keep listening.