The Financial Planner Schema

What is a swim meet?

Maybe you’ve never been to one, but I’ll bet that you have a concept in your head for what a swim meet is like. It may not be accurate or have been created from any direct experience, but you have some idea, or schema, for what a swim meet includes and doesn’t include. You’re probably thinking of a pool, swimmers, timers, lane ropes, and cheering. Your concept of a swim meet probably does not include roller coasters, horses, or a forest.

Your clients (or prospective clients) also likely have a schema in mind for what the process is like to work with a financial planner. This week’s finpsych term, schema, has several different definitions (see here from the American Psychological Association), but we’ll focus on one that could have implications for how your clients view you as an advisor or view the services you provide. 

schema – n. (pl. schemata) 1. a collection of basic knowledge about a concept or entity that serves as a guide to perception, interpretation, imagination, or problem solving. For example, the schema “dorm room” suggests that a bed and a desk are probably part of the scene, that a microwave oven might or might not be, and that expensive Persian rugs probably will not be. 

As we’ve discussed before, our brains are both clever and lazy. A schema allows our brain to take shortcuts by organizing information so that we can quickly retrieve a notion of something without having to think too hard about what should be included in that concept. 

In fact, we create schemata for all sorts of things, including concepts related to financial management. Some of these mental models lead to money-related beliefs (a.k.a., “money scripts“). 

Let’s take another example: the financial planner. What is the general schema of a financial planner for your target clients? 

What if it looks like the following?

A financial planner = money, planning, budgeting, investing, taxes, retirement

A financial planner ≠ therapy, silence, discussing childhood money events, crying 

Why should we consider how our clients view planners? One implication is that while the financial services industry as a whole is moving towards adopting financial psychology, not all clients equate financial planning with diving into their personality. The terms “financial psychology,” “therapy,” and “mindset” may lead to clients conjuring up notions that are not aligned with the services you’re intending to provide . . . and their notions may or may not be favorable. The point here is: proceed with caution when rolling out a new service or communication strategy that is unlike anything you’ve done before. 

If you or your firm are moving towards a new definition (or schema) of what it is to be a financial planner, the success of this new strategy may rely on you first understanding how clients view planning and planners. As the industry is moving toward including psychology, counseling, and therapy in the work advisors do with clients, surveys and client feedback can help you understand if your new strategy should be rolled out without delay or needs a slower roll. 

You can learn more about schemata in this article from James Clear. Or, learn about the implications of childhood experiences and the resulting schema on spending here.

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