People consider filing for bankruptcy for a number of reasons. But whatever the reason, this option is often seen as a last resort—a solution to be considered only after all other potential remedies have been exhausted. Unfortunately, the stigma associated with bankruptcy may make those drowning in debt hesitant to seek relief. Some have ethical objections, and others may view bankruptcy as an admission of personal defeat. As a result, a petition for bankruptcy relief is often made far later than objectively advisable.

You’ve heard the phrase, “the power of positive thinking,” probably more times that you can count. Obviously, you can’t just sit back and think about growing your business without putting in any effort and expect to become successful. But research has shown that positive emotions can help improve your work, your health, and your life, and they play a bigger role in helping you and your clients achieve success than you might think.

As advisors often experience, introducing change to clients can be a struggle, especially when money—an emotionally charged topic—is involved. Financial decision-making is not always, or even typically, rational and reasonable. Although most of us think we’re capable of making rational choices, only part of the mind has the capability to analyze a problem and come up with a rational solution, and this process can be slow and inefficient.

Do you have clients who are overspending in retirement? Chances are, you do. Perhaps they can’t say no to helping their kids, or they understandably want to enjoy their money before their health fails. Or they might be motivated by any other of the common reasons for “bad” financial habits. Whatever the cause, there are a number of straightforward techniques you can use to help encourage positive change when talking to clients about sticking to their retirement plan. 

While we often focus on “risk tolerance,” when the markets head up or down precipitously, managing your clients’ risk perception is actually the key. Of course, to do so, we must first understand the difference between risk tolerance and risk perception. In a nutshell, the reason why people’s risk tolerance can change drastically during times of market volatility has to do with this notion called risk perception. Research from the CFA Institute shows that risk tolerance is a fairly stable “personality trait”—which stays the same unless someone has a life-changing experience. Risk perception, on the other hand, is an emotional, temporary judgment of the severity of a risk during a certain time frame.