Do you have clients who are overspending in retirement? Chances are, you do. Perhaps they can’t say no to helping their kids, or they understandably want to enjoy their money before their health fails. Or they might be motivated by any other of the common reasons for “bad” financial habits. Whatever the cause, there are a number of straightforward techniques you can use to help encourage positive change when talking to clients about sticking to their retirement plan. 

In this article, we’ll discuss how confirmation bias, identity, and inertia can lead to less-than-rational choices and bad financial habits. We’ll also address how these potential obstacles can be turned into opportunities to create breakthroughs with clients. Understanding what's behind a client’s financial decisions, such as the impulse to overspend, will improve your chances of making a difficult conversation go well.

Behavioral Coaching Techniques to Motivate Clients

Here are three opportunities for advisors to harness the power of simple behavioral principles to help the overspending client:

1) Combat confirmation bias. Confirmation bias is part of our basic neural wiring. Most likely there to make the brain operate more efficiently, this behavioral trait leads us to heavily value information that confirms our existing beliefs. For example, say you believe that BMWs are reliable cars and Audis need a lot of repairs. Every time you hear of an Audi in the shop, the instance will be recorded indelibly in your mind, while mentions of BMW breakdowns will be more readily dismissed.

Similarly, confirmation bias can affect your clients’ financial thinking. For instance, if clients believe they’re likely to spend far less in retirement than you suggest, you’ll find it very difficult to convince them otherwise. One way to combat a confirmation bias like this is to show curiosity about what your clients believe and why. Ask curious questions that force them to confront some of their own beliefs. This time-tested tactic—the Socratic method of using inquiry for education—is powerful because we’re more likely to change our opinions when we’re doing the talking, rather than when someone else is telling us what to do.

If your clients aren’t worried about overspending because they believe that their expenses will drop in retirement, you could ask questions like:

• What leads you to believe that retirement costs less than life before retirement?

• What factors in your life are similar or different from the experiences of your parents’ generation? Would those factors cause your retirement to be more expensive than life before retirement?

• If retirement turns out to be more expensive, how would that impact your lifestyle?

If you want to make a statement that goes against a client’s belief, ask permission first. This way, you’ll have a better chance at opening the client’s mind to the new data. For example, you might say:

• “Would it be useful to hear what percentage of my clients end up spending more than expected?”

• “If I had a different sense of how much you might need later, would you want to hear about it?”

Even if the client declines your offer, you’ve planted a seed that will likely take root in his or her mind. Later that night, the client might wonder, “What did my advisor mean that I might spend more later?” This is a client who is now ready to listen.

Leverage This Bias: Since confirmation bias means that individuals are likely to continue believing what they already believe, one opportunity is to find a deeply held belief in your favor—and latch onto it. For example, if clients believe in treating kids equally, frame the need to reduce their support for one child as being more equitable to another child or other children. If they’re concerned about their health as they age, point to rising health care costs. Rather than trying to change beliefs from scratch, you might find that piggybacking on preexisting beliefs is a better way to motivate clients.

2) Reframe ideas for identity. Numerous studies have shown that our conscious and unconscious thoughts of who we are powerfully drive our behavior. If we consider ourselves environmentally conscious, for example, we’re more likely to turn off the car instead of letting it idle while we’re waiting for someone.

With your clients, try reframing a desired behavior in a way that fits their existing identity. This may mean asking supportive parents hard questions, such as:

• “Do you think some struggle is beneficial for children?”

• “Have you seen any of your friends give money to their children at the expense of allowing their children to become self-sufficient?”

Once you’ve asked a question that piques your clients’ interest about their behavior, tie it back to their identity. Here’s an example:

You’re one of the most loving mothers I know—and that’s why I believe that even if it’s hard for you, and even if it hurts your relationship with your son temporarily, weaning him off your financial support is one of the kindest, most generous things you can do as a devoted mom.

Even more challenging, though, is to turn around an identity completely. For instance, if your clients are concerned about their status in society, you may attempt to chip away at the priority of that identity in order to curb their spending. As with any behavioral issue, consider what your clients’ motivation to change might be. Focus their attention on ways their current behavior is causing them pain now or in the future, as well as ways new behavior could be pleasurable.

Leverage This Bias: Try to highlight other identities your clients can leverage. Are they patriotic? Charitably inclined? You may be able to steer them toward an identity that helps them exhibit behaviors that will curb their spending—for example, spending time, not money, supporting a cause dear to them.

3) Break through inertia. For all of us, the easiest thing in the world is to continue down the current path. To change, we first need to have a glimpse of a life we prefer. Help clients break through inertia by asking what they’d really enjoy spending time doing—things that don’t cost a lot. Or delve into what a meaningful vacation could look like that costs $3,000 or $4,000 rather than $10,000.

To help clients who are overspending in retirement, ask questions about solutions (or alternative behaviors) that might control bad financial habits. The more that clients can visualize a palatable or even enjoyable alternative, the easier it will be for them to try out a new behavior. For example, you might ask clients what hobbies they’ve had throughout their life that were most enjoyable and not very expensive.

Proposing an experiment is another useful technique. You might say, “Instead of spending your normal $1,000 per week, what is the least amount you could spend in a single week and still enjoy life?” Let your clients control as much of the experiment as possible and let them know you’re not saying this is a permanent change. They’re just doing a little experiment.

Leverage This Bias: Use our natural tendency toward inertia to reinforce good financial habits. As you help clients start to make positive changes, their new behaviors will also become habits.

Keeping Best Practices in Mind

As you undoubtedly know, despite your best intentions and educational efforts, you don’t have control over your clients’ behavior—it’s their responsibility to change. You can guide their behavior and give them tools for managing retirement finances, but, ultimately, their success or failure is in their hands. For your protection, be sure to let clients know when their spending is unsustainable, and always document your conversations.

Editor’s Note: This post was originally published in November 2016, but we’ve updated it to bring you more relevant and timely information.