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be reframed into a more func- tional mindset, like “Risk is a tool I can use to make a well- rounded retirement plan.” An advisor who understands the underlying beliefs and empa- thizes with the emotion can work with clients to reframe those beliefs.
professional development
“We’re always asking ‘Why?’ We have to be three-year-olds about everything.”
requirements? Maybe they want to devote themselves to a philanthropic cause. How much time and money can they afford to spend, now or in five years from now?
Step 5: Test
Put a plan into action to see how it works
in real life. This is the time to try living on one salary for six months, cut back on work slowly, or join a committee at the organiza- tion you ultimately want to support full-time. Maybe the client discovers that they don’t really love travelling for six months of the year, or maybe an obstacle pops up at the underwriting process. All the data gathered during the testing phase can be used to refine the plan.
One of Chung’s clients, for example, is easing into retirement, cutting back his dental practice by a day every six months. “Every time he does, he goes back to his prototype and tests some of the ideas about how he might spend his time. He’s down to about two days a week right now, and is really starting to feel comfortable with the idea that he’s still a valuable person who is adding to his community and has worth even if he’s not Dr. So-and-So.”
A framework for change
Even the best-designed lives and financial plans aren’t immune to the forces of change. That’s why design thinking builds in that inevitability.
Thinking like a designer means approach- ing financial planning as a process. This leads to more flexible plans because life is always changing: a grandchild is born, a parent dies, there’s a worrying spot on a medical scan, housing costs rise, a novel virus appears. “How do you create doors that you can walk back through?” asks Foat.
Design thinking, Chung says, can’t solve ambiguity or provide certainty in an uncertain world. “But what clients are getting is control. They’re getting a framework to make deci- sions that feel good and make sense.” AE
The five steps of design thinking
Design thinking can be used to build the indi- vidual aspects of a financial and estate plan, and to bring the separate parts together into a whole. Chung breaks down the process into five phases:
Step 1: Empathize
Advisors who spend a lot of time asking questions of their clients are engaging in empathy. The client who repeatedly says she really loves GICs is telling you that she’s risk-averse. Why? What events have fuelled her focus on security? A financially bullet- proof retirement plan, says Chung, “can sometimes fail not because the numbers are wrong but because the client is absolutely terrified about what comes next.” Empathiz- ing allows advisors to create client-centric plans that address not only the numbers but the emotions behind them.
Burnett and Evans are big fans of “refram- ing dysfunctional beliefs.” “Risk is bad” can
Step 2: Define the problem
Advisors need data to assess a client’s goals. Do the numbers support the dreams? Is there a real risk that the client won’t be able to retire when they want to, or do they have gobs of money and need to be encouraged to spend more of it or face tax repercussions? Defining the problem of retirement income, for example, takes savings, pensions and cash flow into account while considering questions about lifestyle and legacy. With the risk-averse client above, one problem will be balancing that aversion with having enough money to retire.
Step 3: Brainstorm
Advisor and client come up with solutions from as many angles as possible, using a variety of techniques. Clients anxious about exactly how they’re going to spend their retire- ment can track their activities in a journal to get a sense of where their passions truly lie. Mind mapping uses free word association to get ideas flowing and brainstorm new solu- tions to the problems identified in Step 2.
For this step, Chopra says, advisors “can talk clients through what we’ve seen other cli- ents go through in various situations, and what has or has not worked for them — and why.”
Step 4: Prototype
Narrow down the scenarios and come up with plans and models to support them. Maybe a client wants to spend part of the year somewhere warm, says Chopra. Where will they go? Will they continue to work? What are the tax implications? The insurance
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