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Some clients may struggle with spontaneous purchases and paying expenses on time, but advisors should be aware that something else may be underfoot beyond irresponsibility.
Christine Hargrove, PhD candidate at the University of Georgia in Athens, Ga., notes that mental health and executive functioning difficulties can affect a person’s finances and prevent them from achieving the financial success they crave.
For instance, symptoms of attention-deficit hyperactivity disorder (ADHD) include impulsivity and procrastination of important tasks. These traits often translate into poor financial behaviours such as impulse spending, and late or missed bill payments, which in turn can cause lower credit scores, says Ms. Hargrove, whose research includes ADHD and money issues.
“They may have trouble getting it together with their finances,” she says. “It’s not an intelligence issue. It’s that financial systems are difficult for them to navigate when they have a working memory issue.”
Natasha Knox, certified financial planner (CFP) at Alaphia Financial Wellness Inc. in Vancouver, works with many ADHD clients and has changed her overall processes to accommodate them better.
“Advisors recommend many best practices to clients. And those best practices go double or triple for someone with ADHD,” she says.
Here are five tips on how to accommodate clients with ADHD.
Everything from mortgage payments, investment contributions and utility bills should come directly out of the client’s bank accounts, Ms. Knox says.
“They should not be relying on remembering to do anything that can be automated,” she says.
2. Set up separate accounts
Some clients have a good handle on the amount of money deposited into their bank accounts each month and how much will be left over for discretionary spending. But Ms. Knox says some clients with ADHD may need a separate account for spending to help them budget appropriately.
“Their spending needs to be untangled from their bills,” she explains. “If they don’t do that, sometimes, they will literally forget that they have a bill coming up the following week and spend that money.”
Even if money is separated, sometimes, the impulsive urge to overspend will still overrule rational thinking. Ms. Knox encourages such clients to find someone in their life who can serve as a money sponsor, reminding them of their goals, spending limit and just offering some self-encouragement.
She adds that a 24-hour cooling-off period can help the client decide whether the purchase is truly necessary.
3. Use an agenda to stay on track during meetings
When clients come to see Chris Poole, CFP at CWP Financial Services Inc. with Sun Life Financial Investment Services (Canada) Inc. in Toronto, he has agendas that focus on three major items that clients want to address. They discuss those, plus anything else the client may bring up and he creates action plans for the items.
As they wrap up the meeting, he goes through what he will do and what the client has committed to do and follows up.
“It helps them to succinctly identify the tasks that they need to do as the client,” he says.
4. Don’t shame
Clients may desire reaching their financial goals but there needs to be some acknowledgement that, for some, it’s a complicated process.
“There’s often anxiety, worry and depression over money and part of that can be the emotional toll of stressful financial decision-making,” Ms. Hargrove says. “When clients experience that, they have a tendency to avoid or put off the things they really need to do.”
Ms. Hargrove adds that ADHD clients may need to be met where they’re at. She gives the example of asking a client to bring in all their receipts at tax time. In that situation, she says an advisor may lose a client as they go into a flight-or-freeze response.
“The information gathering for them is so much harder than you could imagine,” she explains.
Instead, she suggests a step-by-step approach. An advisor could ask the client to bring their laptop and they could look at the receipts together, or set up a specific video call on this issue. It’s an idea that’s time-consuming but respects the client’s much-needed accommodation, she says.
5. Lose the judgment
Some advisors may be seen as judgmental of clients who can’t get a grip on their expenses.
Ms. Hargrove says rather than harping on the negative, advisors could try a “motivational interviewing” approach by asking positive, open-ended questions that encourage thought-provoking discussion.
In the case of a client who has a tendency to overspend, she suggests asking what the client has tried already to solve the problem.
“What were some of the pain points? What went well when you did that? What do you think you would like to try?” she says. “Being more positive makes a real difference.”
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