10 ways to nudge your client towards better financial decisions

Dec 6, 2022

Infographic of 10 ways to nudge clients to make better financial decisions.

Download the infographic here or at the bottom of this article.

When it comes to financial advice, nudging is a very valuable tool. Using it correctly can lead to better advice of more consistent quality and fewer human errors. But most of all, it can help people make the right financial decisions. In our previous blogs, we mentioned the various types of nudges and shared some insights into human behavior. But how do you translate theory into practice? We’ll share a few examples:

1. Pension analysis

Take away the sludge: make sure your client can use government-issued tools – like the Dutch DigID/Mijn Pensioenoverzicht – to supply their pension information. Make providing the data as easy as possible.

2. Funeral Insurance

Give your clients a standard option in your communication. ‘An average cremation-funeral costs 7500 euro, an average burial-funeral costs 9500. In most cases, indexed insurance coverage of 10.000 suffices.’ 

3. Saving for college

Give people a phycological anchor. ‘A child in college, living at home, on average costs 700 euros a month. This is why other parents save 300 a month for 10 years to pay for their child’s education. Which amount do you want to set aside?

4. Change in legislation

Emphasize the loss your client is risking. Preventing potential loss beforehand will activate them more than offering a potential win afterward. By explaining the impact of future legislation in terms of loss compared to the current situation, you can relay the urgency of the solution. 

5. Signing forms 

Send reminders. As an advisor, you may be very aware of not having received a signed document. But your client is likely to have forgotten the form altogether. This is related to what behavioral science refers to as the post-completion error: once a primary task is completed, the secondary task is overlooked. By choosing an insurance product, a coverage, the primary task of your client is completed. The minor administrative task of signing and returning a form is quickly forgotten.  

6. Signing forms 

And while you are in the process of sending a reminder: resend them the said form. This removes the unnecessary ‘sludge’ of retrieving the original email with the form. 

7. Disability insurance 

There is such a thing as the ‘availability heuristic‘. It means your clients find the things they have known, experienced or heard about much more realistic and probable than the things they haven’t seen up close. Share the stories of clients that have successfully claimed their disability insurance. These insurances have a bad rep of never paying up. But for entrepreneurs, having insurance like this one can have a considerable impact. 

8. Filling out or updating the investment profile 

Make it fun. Illustrate using appealing visuals, nice colors, and, wherever possible, video material. It makes filling out an investment profile so much nicer. 

9. Selecting an investment fund

Be mindful of the sustainable option. Is there a profile that will evolve with your clients? One that self-adjusts based on the investment horizon? Point that option out to your client. Adjusting a fund selection can be hindered by a good dose of Status-quo Bias: People tend to prefer the current situation. Leaving things as they are feels safe and comfortable and is much easier than making a change. Therefore, the less need for change, the better. 

10. The client portal or ‘My…’ environment 

Point your client in the right direction, textually but also visually. Make urgent matters stand out. Use the color red, exclamation marks, and danger triangles to draw their attention to things that need it. Always lead them to the next step and make it easy to take. Don’t just show risk, show the solution as well. And make sure your client can act on it instantly. 

Is life insurance missing in a family with children? Show it with a red exclamation mark. If you want to give your client an extra push, tell them how many families have insurance like that. People tend to mimic group behavior. So share something like: ‘96% of the families with children choose to have term life insurance.’ And don’t just say they should make an appointment, but allow them to schedule one immediately. Eliminate every conceivable boundary. Because you may be obsessed with finance, your client isn’t. 

You can download the infographic here.

If you want to know how to implement nudges into your communication easily, reach out for a demo today.

Read more