“I’ve seen this type of thing happen a few times before, usually with older clients, who are more vulnerable. It could be a young girlfriend, a family member, even a caregiver who tries to take advantage,” she says. “I’m not afraid to approach a client on these issues, as there is a relationship established between us. Most of my clients I’ve known for many years … and this is my role as their advisor.”
But what if your client refuses to give up their flame?
According to Birenbaum, it’s about helping clients make different choices and talking to them about what happens if they prioritize short-term pleasures over long-term consequences. She puts clients through what she calls ‘a choice exercise,’ where they identify what is most important to them, in chronological order. For example, going to the casino or funding their child’s education.
“An individual isn’t going to trade off something that gives them short-term pleasure for something that isn’t going to pay off until sometime in the future, unless they get really connected with the payoff of that trade-off,” she says. “It’s coming to terms with choices and the trade-offs that many people are making without even realizing it.”
For those advisors hesitant to confront a client, Birenbaum says you have two options; ignore the problem and focus on what you CAN do (i.e. the client has $200 a month to put towards an RRSP, so help them invest that); OR refuse to ignore the problem and, in addition to confronting the client, plug into a network of professionals who could help support the individual through the transition. (i.e. accountants, lawyers, therapists etc.)
“Whether the client is open to this introductions remains to be seen, but having those resources available (to you) can help because an advisor cannot be all things to all clients,” she says.
“It can take years to help somebody transition and use their money in a more productive manner, both emotionally and financially."
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