The couple, in their 60s, always made a statement when they came into Sarah Carlson Rieger's Spokane, Wash., office: The woman was dressed to the nines—"right out of Nordstrom," said Rieger—and her husband always brought gifts.
"But these were people who, if you peeled back the layers, you saw they were unprepared for retirement," said Rieger, founder and president of Fulcrum Financial Group. With little savings, they were spending almost everything they earned.
It was time for some tough talk. And many advisors take advantage of year-end financial planning conversations to stress budgeting options with their out-of-control clients.
It's at this time that advisors focus on building a rapport and helping the client compare their spending behavior against the retirement goals and dreams they identified during the accumulation process.
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As for the couple, much of the wife's spending was on her children and grandchildren, so Rieger framed the discussion around them.
"I told her that being responsible about her money was an opportunity for her to be an example, to do something to positively affect their lives in the future," she said.
The message got through. The clients accepted reduced spending stipends after other income automatically went into savings, which allowed them to build up their nest egg.
How to confront clients about their questionable financial habits, whether it's not saving enough or running the risk of depleting a nest egg, varies from advisor to advisor. Still, it's a conversation that every advisor has had.
Many financial advisors say that unless handled the right way—with respect, understanding and perhaps a little humor—it's difficult to move the needle.
"Sometimes it's being an accountability coach or professional nag," said Sheryl Garrett, founder of the Garrett Planning Network.
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Garrett once went to a couple's home to discuss how her clients, who had five children, could avoid bankruptcy. What she saw in the refrigerator told her volumes. "It was full of prepared, frozen foods that cost a fortune," she said.
The couple had taken a number of bigger missteps, too, including a Hawaii timeshare, huge donations to their church and a business deal that had soured.
They needed to free up $1,600 from their monthly budget to avoid bankruptcy. A family of seven can save a lot of money by avoiding restaurant meals and prepared foods, Garrett told them.
"There's real value in going to someone's home," she said.
Some advisors are comfortable with the tough-cop approach, but others prefer a different tack entirely.
"If you understand the basics of behavioral finance, you know that 95 percent of the decisions you make with your money are made subconsciously and emotionally," said John Buerger of Altus Wealth Solutions. "We are wired to seek pleasure and avoid pain."
To change behavior, Buerger focuses on hijacking that pleasure-seeking/pain-avoidance system. Instead of stressing budgeting—something most clients equate with, say, a trip to the dentist—he zeros in on their current behaviors.
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Using tracking software, Buerger asks clients to look at what they spent in the last 24 to 36 hours. It's a period of time that's recent enough, but not in the moment.
"Most people in the first few months see that 3 percent to 5 percent of their income is actually going out to pay for stuff that doesn't matter to them," Buerger explained.
Then Buerger can have "the conversation." It starts with: "Would you like to figure out where that money is going so that you can start spending it on stuff that matters to you?" he said.
Similarly, Jeffrey West of Financial Compass Group no longer talks to clients about their risk of outliving their money. In fact, he doesn't use the word "retirement" at all.
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"I used to think I needed to scare clients into saving, but now it's a reward system—and it's a success system," he said.
West makes a game of saving, tapping into clients' weaknesses for certain luxury items, such as designer shoes. He asks such clients to bring him four shoeboxes, which become "saving buckets."
One box represents necessities; another is for discretionary spending; a third, for long-term savings; and the last, for the next pair of shoes, a reward "that gives you that special feeling," West said. He calls the approach a "shoebox budget."
Clients fill the boxes with receipts, for example, from a trip to the grocery store, or with an ATM confirmation of a savings transfer.
West believes that the concept of saving is too amorphous for most people to grasp. Instead, he talks about spending, something people do every day. Saving is therefore, simply deferred spending. "Do you want to spend now, or do you want to spend later?" he asks his clients.
Erika Safran, founder of Safran Wealth Advisors, said she's had the most success in changing behavior by being compassionate and understanding a client's motivations. Safran, a certified financial planner, tells the story of a 60-something couple. He was still working and she had retired.
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The couple met with Safran monthly to work on budgeting and the husband always came armed with stacks of spreadsheets detailing his wife's spending. Safran agreed that her spending, especially on gifts for the couple's adult children and grandchildren, was becoming a problem. But she didn't want the wife to feel berated.
"I realized that she needed a purpose that could make her feel useful in her retirement," Safran said. She needed to replace the splurging on her kids and grandkids.
Safran suggested her client look into volunteer opportunities, such as reading to children in local public schools, that could provide a similar emotional outlet. The woman is now working on getting placed in a classroom.
—Ilana Polyak, Special to CNBC.com.