Nervous clients? Let data be your guide

Clear and accessible client metrics are like a window into your clients' thought processes, concerns and default behaviors.

But what’s the best way to leverage that data?

Instead of claiming their rightful place as the “wow” factor on an advisor’s dashboard, client analytics are too often underestimated and underutilized. Sure, they’re great for getting a sense of the size of advisors’ practices by tallying up client assets or measuring inflows and outflows each month, but today’s tools can be applied to many more situations. 

The granularity available on modern advisor dashboards is so advanced and action-oriented that advisors can arguably see into the future. Just as they would do when making investing decisions, advisors can follow the data to analyze their clients. 

Drawing insights from metrics like incomplete actions or a burst of client portal activity can tip an advisor off to instability in their advisor-client relationships, allowing for deeper client conversations and a more proactive approach to negative financial experiences. 

Too often, advisors turn to additional surveys or new tools when the data they need to measure a situation and make a decision is already within their reach – and a data science degree is not required.

One method of employing available data is to look for the emergence of unconscious client beliefs about money, called money scripts. These patterns can be fairly obvious yet speak volumes about clients’ predispositions towards their finances, including pernicious money behaviors.

Clients who never log into their portal might be coping with money avoidance, which is associated with lower levels of net worth, lower income and a higher likelihood of credit problems. Similar negative consequences can accompany clients who obsessively log into their portals. These clients may fall into the camps of money or status worshipers, clients who place an excess emphasis on the importance of money.

Fortunately, a script isn’t set in stone. Early and empirical identification of scripts can create lifelong changes in the trajectory of client behavior. “[M]oney scripts can be challenged and changed to interrupt destructive financial patterns and promote financial health,” according to Bradley Klontz and Sonya Britt, in an article on the topic that was published by the Financial Planning Association. “Considering a client’s money scripts may be a practical action plan for helping clients gain insight into their financial behaviors and offers a conceptual framework from which changes can be made.”

Dashboard insights can also help clients cope with an uncertain future. According to a recent survey, more than seven of every ten clients working with an advisor are anxious about their finances. Those feelings of unease stem partly from inflation and the worry that a bad financial outcome is just around the corner.

Anxieties appear in dashboard data. Unusual client portal activity, like repeatedly leaving tasks incomplete or recalibrating financial planning assumptions, can indicate unease. 

Using a scenario analysis technique, advisors can help clients manage their anxieties by regaining a sense of control over the future. Scenario analysis is an accessible, narrative-based method for laying out reasonable assumptions, how and when to make decisions and the potential outcomes of those decisions. It’s an advising technique that minimizes client stress, identifies risk areas and opportunities, and gets clients involved with their decision-making process, producing better financial behavior.

Advisors are the experts of their own practices; client data is there to help advisors settle on the best tactics for managing nervous and uneasy clients and reinforcing sound financial behavior. Modern advisor dashboards quickly surface insights and provide information in an easy-to-use format. A degree in data science isn’t a prerequisite for smart advising decisions.