Executive Summary
Change is difficult, and when faced with the prospect of a change, many people opt to stick with the status quo. This is even true in the case of positive changes, such as a new job opportunity or relationship: Even though it might be very likely to make the person’s life better, it represents a departure from life as usual, and there is always the risk that the change won’t work out the way it was expected to. As a result, people are often reluctant to make decisions when doing so would result in a significant change; this can result in ambivalence about taking action to make improvements in one’s life – including the types of financial decisions that advisors work with their clients to make.
Advisors encounter this ‘status quo bias’ with clients who resist taking action on recommendations. Even though the client may agree with the advisor on the action they should take and understand the steps they need to follow, they might still hesitate to follow through on the strategy. And while it can be tempting to chalk this up to forgetfulness, disorganization, or a failure of the client to be fully convinced that the strategy is right for them, the client’s hesitation to act is often the result of their ambivalence and fear around change.
What’s often challenging for advisors in helping a client overcome their ambivalence is that the client is often already aware that their feelings may be irrational, so simply trying to convince them via numbers and logic might be counterproductive: the client doesn’t need to be persuaded that the strategy might be in their best interests; rather, it’s helping them come to terms with the emotional aspect of the decision. And so spurring the client to take action often requires the advisor to focus on helping the client work through their emotional response to the prospect of change.
While discussions around emotional topics can be difficult because of the likelihood of triggering a strong emotional reaction, one method that advisors can use to help their clients overcome their resistance is to ask them what their ‘future self’ would think about the decision. This reframing invites the client to imagine themselves after they have already made the change under consideration – effectively shifting the ‘status quo’ from the client’s current state to their hypothetical future self. And once the client is in that future frame of mind, they can view the decision as if it were in hindsight rather than as a change yet to come – allowing them to temporarily bypass the emotions tied to the change and helping them focus more objectively on the features of their life that are truly meaningful to them!
The key point is that, when entertaining and planning for a new idea or opportunity (e.g., a new job, house, or phase of life), it is common to just keep doing what we are already doing – and when what we are currently doing is working well enough, the emotional ‘cost’ of change often outweighs the potential benefits, even if the new opportunity is truly better. Asking the client what their future self would think can bring in a new perspective, helping to overcome emotional ambivalence in a non-invasive way.
Status Quo Bias And Ambivalence – The Client-Advisor Dance
Everyone has been there. A new opportunity is on the table. It sounds exciting, fun, and, at the very least, interesting… and yet, the idea of making any change is hard to contemplate. This behavior of resisting change to stay with what’s comfortable (even when we think a change would be for the better) is called ‘status quo bias’.
Status quo bias is a cognitive process that makes us choose to stay with what we are familiar with or with what we may currently be doing (even though we may know it’s not the best choice to do so) over making a change (that we may actually think is the better option). This phenomenon is associated with loss aversion, where painful feelings that might arise from a bad outcome are more powerful than the positive feelings that would result from taking a risk to make a change – many humans simply don’t like taking risks… and change is risky.
For many financial advisors, status quo bias is commonly seen when clients are faced with financial decisions. For example, some clients are very resistant to updating their estate plans, despite their advisor’s frequent reminders and the importance of leaving a legacy for their children. For other clients who may want to retire early, revising their budget to save more today can be very difficult. And perhaps some clients may be faced with a new job opportunity where they would make more money, but they don’t take the new job because it feels too risky. Advisors watch their clients dance with ambivalence all the time.
To help their clients grapple with ambivalence, advisors generally take 1 of 2 approaches. The first is to run numbers to address portfolio and goal-centric concerns or needs. And the second is to talk through the steps needed to realize goals by walking clients through both the ‘what’ (e.g., beneficiaries need to be updated) and the ‘how’ (e.g., making the appointment with the estate planner to discuss A, B, and C).
But with these approaches, clients often remain ambivalent. They still may not want to do what their advisor suggests they need to do to achieve their goal, even when they are in agreement with the advisor on what the ‘right’ financial choice is. In these moments, advisors may feel that the only thing left for them to do is to badger the client by having the same conversation again. And again.
So the question is… what role should the advisor take to help their clients deal with their status quo biases? At best, the client’s ambivalence would be resolved – everyone knows what to do, they do it, and they are happy. Yet, very often, while exploring the client’s ambivalence might be interesting at first, it can get tedious for the advisor to have the same conversation trying to help the client decide on taking action but with no resolution. In the worst-case scenarios, the same line of questioning can become tiring and stressful for both the advisor and client, ending in a deadlock with clients that eventually transforms into resentment and stress in the client-advisor relationship.
An advisor’s primary role is to help clients weigh the financial benefits of making (or not making) a change. And as a way of quelling ambivalence, advisors can even help clients plan for taking that new job, considering some of the possible outcomes. Perhaps they end up hating it and decide they want to take a 6-month sabbatical.
So the process doesn’t necessarily consist only of weighing Plan A (e.g., keeping the current job) versus Plan B (e.g., taking the new job and assuming everything works out for them), but also considers other options, maybe a Plan C (e.g., taking the new job, but identifying options if they end up hating their new work) and even a Plan D (e.g., leave the workforce altogether and have a baby). Because part of helping clients fully understand the implications of making a decision includes encouraging them to think through how they would respond to their changing environment in the context of the decision to be made.
Importantly, by working on calculating and explaining all of the pertinent risks associated with the decision, the advisor is ultimately helping the client with the difficult task of progressing through ambivalence. Sometimes this can mean wading through both the financial and emotional sides of a situation until the client feels prepared to make a decision – which may not always end out being fully in line with what the financial advisor may believe is the best answer.
But addressing the emotional aspects of a client’s decision is not always possible through any technical analysis or scenario walk-through that the advisor might discuss with a client. Furthermore, when emotional attachment plays a role in a decision, identifying the ‘right’ decision can become clouded with unreasonable judgment. Thankfully, advisors have another tool available to help clients work through their emotionally laden ambivalence… advisors and clients can actually step over status quo biases by asking the client’s future self what to do!
Ambivalence Resides In The Current Self… So Ask The Future Self For Help!
Emotion is a very common reason for financial decisions to be so difficult for many people, even when an obvious solution seems readily available. Selling an inherited home or a piece of art, having to cut off a family member, changing one’s lifestyle… these decisions can be extremely personal and are always a challenge. Risk and uncertainty play a large part in the emotions that come up, which can include sadness, shame, guilt, and regret – having to sell something that comes with cherished memories or strong emotional bonds can be very painful.
Financial decisions, good or bad, bring with them emotions, and contending with those emotions – even when something makes sense financially – can be enough for a client to want to give up on making a change and say, “I would rather stay where I am than to make that decision.” And the client isn’t the only one dealing with tough emotions around their choice – advisors who have any empathy and connection with their clients can feel this pain, too.
Moreover, even if it is the advisor’s job to recommend solutions that are in the client’s best interest, doing so can sometimes seem confrontational and may even feel detrimental to the client’s emotional wellbeing, given how emotionally invested clients can be in maintaining the status quo. Consider the following example:
Example 1: Anisa is a financial advisor who is meeting with her client Carl. Carl enjoys his current job and believes it will comfortably carry him through retirement.
Recently, Carl told Anisa that he was offered a new job that offers more money, which Anisa knows would expedite Carl’s goal of retiring early – the goal that Anisa assumes is most important to Carl.
When they begin talking about the new job, their conversation goes like this:
Anisa: I took the liberty of running some numbers related to the new job, and I think you should definitely take it because it’s going to let you retire even earlier than we originally planned!
Carl: Wait, what? How do you know? I didn’t ask you to run the numbers. I really like my current job. I make a difference there, and I really like my co-workers. The new place is ultra-competitive; what if I hate my team? What if I get fired?
Anisa: …
In the conversation above, Anisa certainly didn’t mean to offend Carl. However, by suggesting he take the new job, she had apparently taken Carl aback with something he wasn’t ready or willing to consider. This was entirely unintentional on the advisor’s part. The client is wrestling with many emotions that his advisor was not aware of.
Furthermore, the conversation could have been equally unsettling for Carl had Anisa told him to keep his current job because when people are experiencing ambivalence and there are a lot of emotions involved, no matter what side the advisor takes, the client may respond aggressively in favor of the other side simply because they are not ready to commit to either side.
Such situations can be difficult for the advisor, especially when they know that addressing the ambivalence will only elicit resistance from the client and may even instigate a fight. But because clients often haven’t really thought carefully about the impact of their decision, they are unable to recognize the drivers for their ambivalence, let alone help their advisors understand what they are struggling with. Which can lead to advisors offering advice that the client is simply not ready to hear.
For example, in the earlier dialogue, the advisor knew from previous discussions that retiring early was Carl’s goal. So she immediately assumed that his new job opportunity was the best choice, as it would help him retire even more quickly. Yet, Carl’s internal conflict was about leaving his co-workers – something Carl had never discussed with his advisor. Ambivalence and resistance are difficult dances, and there is not always a clear way to face them head-on without creating conflict.
Yet, this is where asking the client’s future self what to do can be so useful. Asking the future self can prevent either party from taking a confrontational stance. Take the following exchange between Anisa and her client Carl as an alternate approach to the dialogue above.
Example 2: Instead of starting the conversation by immediately giving advice, Anisa chooses to start her conversation with Carl by asking him to contemplate how he might consider the issue at a future point in time:
Carl: I’m still thinking about that job, and I am running out of time. Can we think through that a bit?
Anisa: I’m so glad we’re having this discussion. I have an interesting question to ask you first… let’s pretend that you decided to take the job, and it is now 3 years later. You find out that your old job, the one you currently have, is available. Would you go back to that job?
By asking Carl to consider his future self’s perspective, Anisa can delay any advice until after Carl has resolved their feelings of ambivalence and shift herself away from being the target of any potential resistance.
In essence, asking the client to consider what their future self would do or want is a non-confrontational way to help them process ambivalence and move past potential status quo biases where humans tend to keep doing what they have always done. In asking about the perspective of the future self, the current self doesn’t need to make a decision, and the ‘status quo’ has now become the new job. The emotional pull of the current predicament is gone.
How To Ask The Client’s Future Self What To Do In Moments Of Ambivalence
As one has likely gleaned, asking for the future self’s perspective is a thought experiment. It is not what a client expects their advisor to ask, and if asked without warning, they might not be willing to play the game. As such, before using this strategy, advisors can ask the client for permission.
Imagine the following example:
Example 3: Anisa is a financial advisor, and Connie is Anisa’s client. Connie inherited a summer cabin when her mother passed away a few years ago. The real estate market is hot, and Connie has been thinking about selling the property. She has thought about using the proceeds to take a nice vacation, superfund her grandkids’ 529 plans, or maybe even buy a new, nicer cabin.
Yet, every time Connie starts to talk about the vacation, the grandkids, or a new cabin, she immediately follows up with stories about the cabin involving special memories from her own childhood and from her children’s. She has generations of memories in the walls of the cabin, and she feels that selling the cabin would be equivalent to selling those memories, too. She becomes overcome with emotions every time she thinks about it, and she ends up doing nothing.
Thankfully, Connie’s advisor Anisa actively reads the Kitces.com blog and recognizes that Connie is in a state of ambivalence. She knows that it is best to avoid giving advice at this point. She has had conversations about selling the cabin with Connie a few times before and has even run some different financial scenarios for Connie. It is clear that, from a financial standpoint, selling the cabin would help Anisa reach several of her goals.
However, almost a year has gone by since Connie broached the idea of selling the cabin, but she has yet to take the first step of calling a real estate agent to get started.
Anisa knows Connie needs to deal with her ambivalence before she can make a decision, and she wants to help Connie through the process. She decides to ask Connie to think about what her future self would do.
Anisa: Hi, Connie! Good to see you. What’s new?
Connie: Oh, not too much. I think everything is pretty good. I just still struggle with what to do about the cabin.
Anisa: Connie, I am so glad you brought that up. I know we have gone over the numbers, and we can certainly do that again if that is helpful. Yet, before we do that, I wanted to ask you if we could try a bit of a thought experiment?
Connie: Sure, if you think it would help, let’s do it.
Anisa has started by asking Connie for permission to try something new, and Connie was willing to try the thought experiment. This can be useful for the advisor, especially when they are still practicing the new approach; the first few times an advisor tries asking the client’s future self to consider a decision involving feelings of ambivalence, the setup might feel a bit awkward.
For this approach to work, the advisor has to build up a storyline to help the client envision their future life, and this can take practice. But by asking for permission to try something new, the advisor is asking the client to accommodate a potentially imperfect setup. This way, even if the setup doesn’t go smoothly, it’s okay. The client has given their consent, they are onboard, and they are interested in what the advisor says even if it doesn’t play out smoothly the first few times that the advisor tries this out.
Asking for permission can also be important by connecting the client to what is about to happen. In a sense, getting permission from the client serves as a way for the client to pre-commit to the thought experiment. The client will be more likely to consider what the advisor is saying more thoughtfully and will also be more willing (hopefully) to talk through their new perspective because they just agreed to the experiment a moment ago.
Once permission has been granted, the advisor can set up the thought experiment not just to take pressure off the client from having to make any decision at all but also to remove the potential for any status quo bias to impact the client’s thought process.
Example 4: Continuing from Example 3 above, Anissa wants to help Connie eradicate her status quo bias so that the challenge of letting go of the cabin memories is gone and over. Their conversation proceeds as follows:
Anisa: Great! So just go with me for a moment… you can close your eyes if that helps. We are going to envision your future 2 years from now. You have already made the decision to sell the house and have made $450,000.
We finally have everything settled, and you are starting to plan your vacation. We have also been prepping the paperwork for your grandchildren’s 529 accounts. And out of the blue, your real estate agent calls to tell you that your cabin just got put back on the market at $450,000. Do you repurchase the property and forego the trip and 529 plans? Or do you stick with where you are now?
This story is the part that can be difficult to create. The first time an advisor tries to tell the story of a client’s future life, it can come out a bit clunky. Ask for permission to smooth the rough spots until the advisor has gotten enough practice with using future-self scenarios so that the story of the future rolls out without a hitch.
Connie: Well, when you put it that way… I think I would just stay where I am. I wouldn’t want to repurchase the property just to break even; that wouldn’t even really feel like breaking even.
Anisa: Okay, that’s insightful. What else is coming up for you?
Connie: Well, in putting it the way that you did… I know it is emotionally difficult for me to sell the cabin. And it’s that emotion that’s holding me back, not the actual dollars.
Anisa: That’s insightful, too. What do you think that means to the decision that your current self is facing right now?
Connie: In some ways, I think it means that I should go ahead with the sale. I know it’s going to be hard for me, but I know I wouldn’t repurchase the cabin if I had the chance. I really do want to move forward; I need to focus on my grandkids and the new memories we will make on vacation.
At this point, it is important to note that Connie may still be a bit ambivalent. However, the key difference is that Anisa and Connie are not fighting. Anisa’s ‘advice’ is not to make a decision straight away; it’s to consider what things would be like if the decision was already made, which helps Connie convince herself about what she really wants to do.
Consider Anisa’s first client, Carl, from the first scenario where Carl has been offered a new job.
Example 5: Anisa’s first conversation in Example 1 with her client Carl about his new job ended badly – he became very defensive about leaving his team and retiring early. Yet, Carl is still thinking about whether he should change jobs. He has debated this potential opportunity for the past 2 months and is running out of time to make a decision. When Carl comes in next, Anisa asks for permission and jumps right into a thought experiment with Carl.
Anisa: Carl, I’m really glad you’ve come back in to talk about this again. If you are open to it, I want to try something different today. I want to ask a bit of an odd question; would that be alright?
Carl: Sure.
Anisa: Okay, great. Let’s imagine it is 3 years from now. You took the new job. You are settled into your new town. You are making $50,000 more a year, and things are going well when your old boss calls you out of the blue and says that your old position is still available. Do you take the offer, move back, and deal with a $50k pay cut?
Carl: Man, okay. A $50,000 pay cut might be pretty hard. But I wouldn’t have taken the new job for the money. The money is nice, but I am doing well where I am now. Honestly, I do think I would take my old job offer and move back. I love the team that I work with. I love the school my kids are in. The new job would probably be a cool opportunity, but I think I would only want it for a short time… just because I am curious. But I would want my old job back. I am happy. I know I would miss it.
In the above exchange, Carl realizes he does not want the change. The extra money sounds great, but it is not really what’s most important to Carl. What does matter most to Carl is his current team and his family life, which was hard for Carl to recognize through his current emotional ambivalence. But by asking his future self what to do, Carl was able to look past all the emphasis that was being placed on the money and the potential, short-term excitement of the new position.
Importantly, by asking Carl to consult with his future self, Anisa helped Carl recognize that his decision to stay where he was and decline the new job offer was based on his own important values and not because of any status quo biases. Carl was able to identify the specific reasons that were driving his decision… he was not going to choose to stay put simply to sustain his indecision.
Once the client has worked through their ambivalence and has decided which choice to make, the next step is to help the client move forward with their decision and figure out what the client is willing to do next to start taking action.
To do this, advisors can emphasize the meaningfulness that the decision holds for the client (often revealed through the future-self conversation) and help identify what action makes the most sense by asking the client follow-up questions.
Example 6: To explore Carl’s new understanding of what matters most to him, Anisa asks follow-up questions and continues the conversation from Example 5 with the following:
Anisa: Carl, this is great. I am so glad you have this clarity. And honestly, now I am wondering… if spicing things up at work is what you are after. Is there a way to do something like that within the job you have now at your current company?
It doesn’t matter how Carl replies to this; Anisa is on to the fact that Carl wants a new challenge, and there may be many ways to fulfill that need that wouldn’t require taking the new job that Carl now understands he doesn’t even really want. There are more opportunities for Carl and Anisa to brainstorm as they are no longer just talking about the new job.
As another example of using follow-up questions, Anisa helps her client Connie, from Example 4, explore the meaningfulness of her choice more deeply. She believes this will help Connie bring closure to the memories at the cabin so she can help her make plans to move forward.
Anisa: Connie, would it be helpful if we brainstorm a few ideas about closing out the memories you have of the cabin? For instance, would you be willing to consider having a final party at the cabin for everyone to say goodbye? What would you need to make a meaningful final memory?
Connie: Oh my gosh, yes. I could do the holidays there this year and let everyone know ahead of time that this will be the last time to see the cabin. We can all plan to say our goodbyes and make a final, wonderful memory. I like this idea.
Anisa: Great. And I don’t want to push, so feel free to say you are not ready, but I think a big next step would be to contact a real estate agent. How would you like me to support you in that step?
Connie: Yes. As fun as it is to think about the party, it isn’t as fun thinking about talking to a real estate agent. In terms of how you can help, can you just remind me of this conversation in a week? Call me in a week, and let’s talk through some suggestions for a real estate agent.
Anisa: I am happy to do that for you. I will call in 1 week, and we can start reviewing some real estate agent options.
In the above conversation, Anisa has helped to ground Connie with some concrete next steps and doesn’t just leave her with ideas about what to do without support or guidance. Anisa has actively engaged in both the financial aspect (i.e., helping Connie find a real estate agent) and the emotional aspect (i.e., suggesting a final party as a way to find closure from the memories that once held her back from making a decision).
Connie and Anisa both have clear next steps to act on, which represents a totally different scenario than if Anisa had started with advice for Connie to make a decision based only on the option that offered financial gain. At this moment, Anisa and Connie are a team working towards a meaningful goal that Connie has recognized as what she truly wants – not just what is financially savvy.
In the situations for both of her clients, Connie and Carl, Anisa has positioned herself on the same side as her clients. She never dispensed advice about the actual decision to be made. Instead, she focused on getting the client – through asking the client’s future self what to do – to get clarity on what meant the most to them. Anisa knew that pushing the client in either direction before they had this clarity would only perpetuate and fuel the client’s emotional ambivalence.
Anisa helped her clients get past their status quo biases and, at the same time, showed her clients that she was on the same team as them. And from there, Anisa was able to put together a plan toward the direction that had the most meaning to the client, that they were able to choose for themselves!
It can be hard for advisors to do the ambivalence dance around difficult choices that a client is struggling to make. Nothing gets done, and it can even cause a rift in the client-advisor relationship. When clients are experiencing ambivalence, even well-meaning and financially sound advice can sound argumentative.
As a different path forward, advisors can encourage clients to ask their future selves what they would do. This helps to avoid a potentially argumentative conversation and also sidesteps status quo bias just long enough for the client to reflect on their situation from a different perspective, where the emotion and turmoil of making the decision has been eliminated because the decision has already been made.
And once the client can assess their situation more clearly, advisors can then offer advice to help clients take the next steps and support them once they are ready to move forward, with confidence that they are making their decision for the reasons that matter most to them!
