STREET ADVICE....3

Maintain the Rage

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TTM Stage - Maintenance

Having invested time and effort with clients new to regular savings, investment and prudent financial management you would think it was time to move onto the next in the queue; it is never that easy and obvious. Given human nature, personal and society-wide random and discordant change, new behaviors are prone to enormous pressures that can trigger relapse.

Adopting a new behavior doesn't necessarily mean the individual can maintain it. The onus is on you and shared systems to help keep the individual on-track. 

TTM processes

The very same processes you employed in the Action stage where the client fully committed to affirmative financial behavior still apply during this stage.

Helping relationships

Providing help takes on more of a preemptive pastoral care aspect. It means  making it clear all doors are open after you have a client on-board and invested. Smart money apps like DOSHI integrate instant messaging facilities that include options for Groups as part of their client support function; make use of this and similar technologies to reach out and help keep your clients on track. 

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Contingency management

More than ever, being able to identify earlier divergence from positive patterns of activity compared to the mean is vital. Having access to a shared view of transactional finances even in summary form is a helpful early warning tool for advisers, enabling them to step in as needed. Under-performance should trigger notifications to both adviser and client. 

Nostradamus

If you have the facility to be forewarned of a client(s) tendency to stray off-course you may be forearmed and better able to respond.

It's feasible that prediction features of apps can yield the probability of individuals persisting with the target behaviour including maintaining positive cash-flow, seeking advice and improving financial literacy. This kind of utility is at the heart of DOSHI. You will know who is more likely to stay the course, seek help or struggle and give up.

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A prediction mechanism should work hand-in-hand with a reminder system based on behavioral cues such as SMS messages reinforcing positive behavior and exalting the benefits of credit card repayment and savings opportunities.

Stimulus control and counter-conditioning

The mechanisms you have in place throughout the Action stage simply need to persist for up to 12 months to help the client help themselves in the Maintenance stage.

Behavior design

Certainly, it needs to be made clear that by persisting with a financially positive behavior the individual can help avoid the pain of financial loss and avert the fear of continuing a downward spiral.

Clients in a Maintenance Stage need to have a social network of similar others, working in conjunction with positive social learning dynamics, recognition and co-operation. I'm surprised for instance nobody has created a Personal Finance version of stackoverflow.com where like-minded peers who have discovered how to solve financial management and planning problems can share their knowledge and views.

Invested effort and value

Being able to share with the client their journey from their original baseline in terms of financial competency and results helps reinforce with them the value of their invested effort in terms of key outcomes; nett worth and self-worth.

An app such as DOSHI makes use of a virtual currency system that enables the client to be rewarded for both short and long term persistence with positive financial behavior and their outcomes. This virtual currency, able to be transformed into real world gain has its own stored value to reflect the invested effort of the client in making and sustaining change.

Taking the temperature

The ability of apps to keep the client and adviser informed of cash-flow trends and manage a cascade of suitable, tailored reminder and support messages may make a positive contribution to maintaining constructive financial behavior.

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It still leaves the question

how do we know if we have changed the proclivity of the client toward savings becoming part of their identity?

Really, you can measure outcomes simply enough by way of financial records but to delve into their personal orientation toward savings it will require an evidence-based tool to return clear, dispassionate values. More on this next article.

References

Grubman, J., Bollerud, K. and Holland, C. (2011). Motivating and Helping the Overspending Client: A Stages-of-Change Model. Journal of Financial Planning, 24(3), pp.60-67.

Laurillau, Y., Calvary, G., Foulonneau, A. and Villain, E. (2016). SEPIA, a support for engineering persuasive interactive applications. Proceedings of the 8th ACM SIGCHI Symposium on Engineering Interactive Computing Systems - EICS '16.

Prochaska, J. and Velicer, W. (1997). The Transtheoretical Model of Health Behavior Change. American Journal of Health Promotion, 12(1), pp.38-48.

Xiao, J. and Wu, J. (2006). Encouraging Behavior Change in Credit Counseling: An Application of the Transtheoretical Model of Change (TTM). SSRN Electronic Journal.
 

street advice ...2

Action stage


Now that the client is taking responsibility for their actions and are committed to following through with change you role will shift to confirmation and support. Sharing a self-regulatory feedback mechanism in order to track goal accomplishment and variance continues to be a key management task for all. Ideally you would use an app or similar for this.

 Monefy

A personal finance manager and expense tracker that will help you to find out where your money goes in easy and efficient way. Apps like this deliver financial behavior monitoring simply & practically.

TTM process

Helping relationships

It's vital the client makes the most of positive, supportive social relationships now that they are committed to changing behavior and outcomes. Tap into family and friends of the client and involve them in your joint processes. The power of apps like DOSHI is the facility to integrate messaging and social networks painlessly and link them to advisory processes. 

Contingency management

Here the challenge is putting in place strategies to prevent previous negative behaviors such as impulse spending; lazy food and services budgeting and failure to negotiate better pricing for goods and services purchased.  

Practically, we look to create an environment that increases rewards for positive behaviors and decreases rewards for counterproductive behavior.

Using apps with a well designed behavioral notices system it's feasible to deliver constructive, tangible rewards at the right time and in the right way to individual clients. These rewards can be accompanied by reminders of relevant strategies to persist with the behavior change.

 

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Stimulus control

Again the role here is one of influence, usually mediated through the client's social network with the aim being to remove reminders or cues that invoke negative behaviors such as impulse spending.  Credit card removal is an extreme technique to be employed here, along with reduced incidents of shopping trips and an agreed budget that includes provision for small rewards based on compliance.

Counter-conditioning

This was pioneered in smoking cessation and similar substance abuse management whereby the individual substitutes positive actions and thinking in circumstances that have previously elicited a destructive behavioral response. eg Home baking instead of a retail coffee and donuts.

Behavioral design steps

Protectability

Here we group the TTM processes under a design pattern we call Protectability which as the name suggests is intent on protecting clients from risky contexts or misbehavior that stand to trigger a step backwards.  The pattern makes use of alerts to warn users of upcoming undesired effects ("trouble ahead") and provide support in anticipating inappropriate behaviors and their unwanted effects. e.g A bank budgeting app warning of an at risk positive account balance due to pattern recognition of spending against upcoming commitments. 

Accountability


After setting goals in the Preparation Stage, clients are encouraged to not only share the goals themselves but progress against these goals. By making variance transparent, timely help and reminders can be channeled to support the individual. In the UK 100% mobile bank, STARLING use a GOAL feature for their customers.

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In the next article we will examine the processes that can be put in place to prevent relapsed behavior and maintain autonomous financial behavior.

References

Grubman, J., Bollerud, K. and Holland, C. (2011). Motivating and Helping the Overspending Client: A Stages-of-Change Model. Journal of Financial Planning, 24(3), pp.60-67.

Laurillau, Y., Calvary, G., Foulonneau, A. and Villain, E. (2016). SEPIA, a support for engineering persuasive interactive applications. Proceedings of the 8th ACM SIGCHI Symposium on Engineering Interactive Computing Systems - EICS '16.

Prochaska, J. and Velicer, W. (1997). The Transtheoretical Model of Health Behavior Change. American Journal of Health Promotion, 12(1), pp.38-48.

Xiao, J. and Wu, J. (2006). Encouraging Behavior Change in Credit Counseling: An Application of the Transtheoretical Model of Change (TTM). SSRN Electronic Journal.


 

Street Advice

 

Introduction

It's not uncommon when discussing research findings with financial advisers to see some eyes roll to the back of heads, others search in vain for an exit door and a handful engage with the content all bright-eyed with fervor. Sadly, the most common subject matter in these briefings is old school investment forecasts and rehashed Reserve Bank statistics, resplendent with death by chart slide delivered as a less than kind form of anesthesia. Maybe, just maybe we can momentarily shift the content toward a more personal and pragmatic theme and see if we can't bring to bear a distilled set of practices and tools for advisers that directly equip them to better understand the behavioral profiles of clients and tailor the right service mix at the right time. From a purely selfish perspective, gleaning the necessary knowledge to keep your clients saving and contributing safeguards your firm's revenue stream doesn't it?

These practices and tools are a by-product of evidence-based behavioral models intended to shape financial advice across the life cycle of clients. In our own practice where we are focused on the design and development of financial health management apps we embrace a number of models including:

  • The Transtheoretical Model (TTM)
  • Personal Savings Orientation (PSO) construct
  • SEPIA a Persuasive Design Model
  • Behavioral economics and Choice Architecture

These are used in tandem with machine learning to shape an app experience that aligns with the behavioral state, financial proclivity and identity of individual users so they persist in affirmative behavior over time.

The next few articles will try and distill common sense recommendations and practical tips in plain English for advisers from this collection of arcane acronyms and obtuse titles.

The Transtheoretical Model or Stages of Change


This model, devised by Prochaska & Velicer (1997), was initially used for health-specific cessation therapies including alcohol and drug abuse. Its primary aim is to help understand the processes of change required to guide people intentionally through an affirmative behavioral change.  It was more recently applied to the challenges of credit counselling Xiao & Wu (2007) and has gained in popularity for supporting consumer finance behavior; albeit poorly in most instances.

People rarely spontaneously adopt and sustain a new life shaping behavior; they tend to progress and regress through stages as outlined in the diagram.

The Transtheoretical Model Stages of Change 

The Transtheoretical Model Stages of Change 

TTM also maps the underpinning change processes that guide progression through stages in the following table.

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Individuals, by and large do not travel these stages as a linear journey; life circumstances and environmental fluctuations tend to shape the path as a spiral pattern.

Using the Model with Clients

Determine their Stage of Change

This is simply done using a self-reporting process. Ask clients to answer the following 4 questions with a Yes or No. The responses allow for a discreet categorical measure of each individuals Stage of Change.

1. I am intending to take action about my finances in the next 6 months.

2. I am intending to take action about my finances in the next month.

3. I have taken action about my finances within the past 6 months.

4. I solved my financial problems more than 6 months ago.
 

Precontemplators (Ambivalents)

They will answer No to all 4 questions.

Contemplators

They will answer yes to Statement 1 but no to all others.

Preparers

They will answer yes to Statement 2 and no to the others.

Acting

These people answer Yes to Statement 3 and No to Statement 4.

Maintainers

They answer yes to Statement 4 only.
 

Shaping your Advice and Interventions

Grubman, Bollerud & Holland (2011), provide an interesting view on mixing motivational interviewing with the stages of change. providing valuable insight and reflection,  well matched to the needs of Australasian advisers. 

As our practice is in the business of providing Advisers and Clients with apps to support financial behavior change we have tested the waters and unsurprisingly found that a vast majority of test users of the app are in either the Preparation or Action stages. For the sake of this exercise then let's begin with the Pre-Contemplation and Contemplation Stage.

The Ambivalents - helping the Fence Sitters

There are 5 TTM processes you can take advantage of throughout this stage but firstly start with your interpersonal approach to discussions.

Bear in mind most of these people have moved to this stage after first being in denial about financial problems. They are still likely prone to impulse and overspending. As such they will reveal evidence of resistance which requires you to exhibit empathy and a balanced understanding of the triggers that drive their spending, the temporary satisfaction it brings them and the upside of shifting that activity to a more measured approach.  While the client is aware of the overspending they have not yet firmed up a clear understanding of the practical means of bringing it under control. There is as yet no strong understanding of the relationships between cause and effect. They are in your office seeking help as they are fearful they cannot go forward with change on their own.

Social liberation

This step is about gently sharing the availability of options in the client's  external environment that encourage people to begin or continue a change. For example company Kiwi Saver:Australian super or  subsidized Health Insurance plans; a high school graduate exploring scholarship options.

This helps bring to the fore the notion that social norms have moved in the direction of supporting savings behavior for example.  A lot of other people are "doing it" and it's easy to start with.

Emotional arousal using dramatic relief

Dramatic stories of how others people’s lives have changed may encourage some  to save themselves. Try curating and sharing content (magazine articles, video) of similar others experiencing a change in fortune and well-being on the back of altering financial behaviors as well as instances of those who have spiraled into self destruction e.g. mortgagee sales. You can have the contrasting experience of others speak to the polar opposites of behavioral management and the consequences.


Environmental re-evaluation

This is a more pragmatic variant of emotional arousal and is fact-based, succinct, without being dramatic. Look to make use of very simple and clear graphics, numbers and images that depict consequences of overspending versus thriftiness. This enunciates the extent of benefits or negative consequences in a dispassionate manner. Never assume your clients share an aptitude for numeracy and death by chart; cater for different learning styles as one hat does not fit all.

Self re-evaluation

This means thoughtfully assessing a problem and imagining what could happen if you solve it with improved behavior such as spending control. For example, “If I start to save, I can help my children toward a first home deposit or ensure they leave university with minimal or no debt.” This envisioning helps prime the individual toward an identification with the desired behavior; " I feel like I am a saver that can help pay for my kids' education". Get them to put together a simple collage of positive images that reflect back these visions in a concrete way.

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Bringing behavior design into play

From the field of behavioral design we can bring to bear the mechanisms of Observability and Intelligibility to better equip the client with the knowledge and understanding they need to fully appreciate their current and potential future states given a number of possible changes to behavior.

Observability
Reveal

Straightforward access to key bank and associated  accounts reveals the facts. 

Reflect

Observing transactional data from accounts provides insights into expenditure patterns. Printed statements or online account access both serve to deliver this for the client. The point of the exercise is to begin a conversation and listen to the thoughts, ideas and rationale of the client. 

Discover
This activity is all about causality; associating negative trends with less than ideal decision making.  It can be as simple as discovering what happens when the client reduces take away meals to twice per month and extrapolating that over 1 to 2 years.

Intelligibility
Situate
This relies on Social Comparison. For example what the average Kiwi Saver investment is for others of similar income, age and occupation.  Using advanced technology such as DOSHI with its machine learning, clients can see how their persistence with positive behaviors affect social-based performance comparisons of financial progress or regress in real-time.

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At the heart of Observability and Intelligibility must be the means to explain causality, place current financial state and outcomes within a peer-based context and allow adviser and client to monitor changes to these at any time. Observability acts to support the transition between the Pre-contemplation to Contemplation stage and Intelligibility underpins the necessary processes of the Contemplation stage, Laurillau,Calvary,Foulonneau & Villain, (2016).

Your actions as an Adviser during this period is as always supportive but it probably also edges toward calm, dispassionate forensics and letting information speak for itself. Use should be made of Chat and Instant Messaging systems without turning into a stalker.

Getting them ready-The Preparation Stage

Your clients when they have reached this stage have acknowledged their current state and how they arrived there and have accepted there are practical, achievable means of improving their lot. They will begin to engage you more for information, clarification and reassurance. Your focus should be on encouraging them to think for themselves in small steps and see if they can't tell you what they need to change and how; use an open-ended questioning style. "What changes are you considering?"; "What is your next step?".

Your role now evolves more strongly into a mentorship capacity, encouraging autonomous decision-making but at the same time doing your level best to improve the financial literacy of the client. The greater their self efficacy, the more likely they are to think autonomously and believe in their behavioral change.

Key TTM Processes

Self liberation

Here we look to encourage a solid commitment to change.   Setting public goals by the client will be a powerful means to incite forward thinking and action. These goals then become the yardstick for self-regulation particularly with the transparency afforded by account motoring. Access to straightforward goal setting calculators makes sense here. Look to make use of apps like DOSHI that provide this and allow the user to simply answer very basic questions with the option to Save and Share the results. This helps develop confidence and an understanding of cause and effect.

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Behavioral design functions

Learnability

Typically uses a set of abilities that allow induction and deduction. What this means is providing the facility for your clients to learn through simulation and experimentation. With the NZ FUNDS web app,  clients are provided with the ability to adjust the relative proportions of investment types and see an immediate change in outcomes. More advanced, evidence-based apps like DOSHI directly enable the client to see exactly which of their financial behaviors affect their comparative score for financial health and also predict their cash-flow outcomes. Spreadsheets can emulate this kind of functionality at a very basic level and can be used depending upon the numeracy skills of the client.

Next article - Action and Maintenance Stages
 

References

Grubman, J., Bollerud, K. and Holland, C. (2011). Motivating and Helping the Overspending Client: A Stages-of-Change Model. Journal of Financial Planning, 24(3), pp.60-67.

Laurillau, Y., Calvary, G., Foulonneau, A. and Villain, E. (2016). SEPIA, a support for engineering persuasive interactive applications. Proceedings of the 8th ACM SIGCHI Symposium on Engineering Interactive Computing Systems - EICS '16.

Prochaska, J. and Velicer, W. (1997). The Transtheoretical Model of Health Behavior Change. American Journal of Health Promotion, 12(1), pp.38-48.

Xiao, J. and Wu, J. (2006). Encouraging Behavior Change in Credit Counseling: An Application of the Transtheoretical Model of Change (TTM). SSRN Electronic Journal.