Use Storming, Norming, and Performing to Help Couples Meet Their Goals
All wealth advisors run into this problem, but you can help your clients by using this simple strategy.
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If you have been managing wealth for high-net-worth clients, you have run into couples who have vastly different views about how to invest. Today I will be unpacking what I found works to bring a couple together and to help you manage more assets, make them more money, and keep them happy.
Opposites attract so married couples will have different views of risk taking.
They say opposites attract. That is even true with many couples when it comes to risk. For example, imagine a wife who prefers taking investment risks, viewing their real estate as a secure base to justify more aggressive financial moves. Conversely, her trained risk manager husband advocates for a more conservative approach due to perceived economic and geopolitical risks.
Why financial plans can get derailed and become a lose-lose proposition
When you run into a new couple that does not see eye-to-eye, it’s a real roadblock for you to help them create a unified wealth plan and investment strategy. Unfortunately, many of these couples watch their portfolios underperform and, ultimately, get discouraged. Many times, they will blame the advisor. Don’t let this happen to your client or to you!
If left to their own devices, client decisions are delayed, and bad timing destroys long-term wealth. Differing views can result in delayed decisions or inaction, potentially leading to holding too much cash or missing optimal reallocation opportunities. This friction often stems from inadequate communication, causing poor timing in investment choices.
Clients that do well delegate to competent advisors…but if they can’t delegate no one wins
When couples start working with a wealth manager, they often face challenges in learning to delegate and trusting the advisor, especially if they disagree on financial plans. The shift from managing their own finances to relying on an advisor can be psychologically difficult, particularly for those used to controlling their investments, further complicating the advisory relationship.
From storming to norming to performing
In 1965, American psychologist Bruck W. Tuckman developed the Tuckman Model framework for how groups develop. Working with a new client often follows the stages of:
- Storming: Conflict negotiation
- Norming: Establishing protocols to work together
- Performing: Implementing the protocols to get results
The best thing to repeat with the couple is that you are all in this together. Foster an environment of collective goal-setting over individual preferences. This unity reduces conflict, builds trust, and improves decision-making.
Push each client's views to the extreme and the right path becomes clear
If you are married, you know sometimes you just want to be right. We all love when our spouse says, “you were right, and I was wrong.” To prevent this desire from becoming an endless loop, it’s better to explore the consequences of each point of view.
Going back to our example of the couple with one partner who was risk averse and one who was risk loving, first Illustrate what their portfolio would look like of they took the aggressive plan. Show the drawdown in values, show how long it takes to make up losses. Then, show how the conservative plan eats into wealth because of the destructive power of inflation, and the loss of wealth for spending and passing to heirs.
This is a great way to help them come to a compromise. Develop a strategy that blends both aggressive and conservative elements, showing each client the implications of too much or too little risk. Use visual aids or simulations to illustrate potential outcomes.
When everyone is heard, the plan works well
Spend ample time in the storming phase to ensure all viewpoints are heard. Facilitate discussions that lead to a mutual understanding, which is crucial for norming. I found the key is to allow time for this to happen and to even ask questions to bring the process along more smoothly. This requires patience. The number one rule is:
Make sure all communications are sent to BOTH clients.
This will keep everything transparent
Consistent advice removes old habits, and it gets easier
When working with a new client that has never worked with an advisor, make sure they understand that how you will make their life easier and better. Deliver this outcome by acting as a shortcut, providing comprehensive due diligence, and presenting only solutions that truly make sense for their situation. Delegate administrative tasks like paperwork and trading to your back office to minimize their burden.
Emphasize how partnering with an advisor can streamline and enhance their financial decisions compared to self-management, showcasing the value of your expertise, time-saving strategies, and strategic investment oversight. Always position yourself as being on their side.
Coordinating accounts is money in the bank for your client
Sometimes clients will want to separate their accounts. One will want their account to be aggressive while the other will be conservative. This adds a lot of complexity to financial plans. It also can hurt results because the allocations will cause unnecessary taxes, transaction costs, and poor estate planning. If clients insist on separate investment approaches, explain the long-term impact of fragmented strategies.
Encourage clients to think long-term, setting clear time horizons for investments, especially for less liquid assets or complex financial vehicles which tend to riskier. And lastly, as always, have regular meetings to review.
