Journal of Financial Planning: November 2015
“What has to happen for you to feel really happy with your life?” In theory, that’s a simple question, but you’d be hard-pressed to find many people who can answer it easily or succinctly.
For financial advisers asking this question to new clients in the discovery phase or even established clients who have experienced a life event, the answer can be even harder to find, let alone plan for.
Nevertheless, this question is the foot in the door to building client relationships. Leading with this question may catch clients off guard, but it can then steer toward conversations that allow them to open up and feel more comfortable.
Clients come into meetings with financial advisers assuming they’ll have the “money” conversation—investments, insurance, and the importance of a plan. They are expecting to be sold. But having the “life” conversation— thoroughly exploring their current and future goals, hopes, and dreams—lets them know you get it. You want to be a part of their future. This is where trust is born.
Whether you’re talking about five, 10, or 20 years out, the answer to this one question is central to creating the right financial plan for your clients. From there, it’s easier to determine where they want to go and explain which solutions and products are needed to achieve their goals for their family, retirement planning, charitable giving, and beyond.
Answering this question does take a bit of time, and that’s good! You will see as time goes on, there are four additional topics of conversation that we, as advisers, should explore with our clients to help them understand how comprehensive financial planning can support their goals. Having these conversations sets the foundation for a lasting level of trust that can carry through generations and create value for them and their future.
Planning for Uncertainty
It’s hard to bring up and discuss the issues that clients may not realize or believe could have a drastic effect on their financial future.
For instance, I recently received an unexpected email from a former client with whom I’d worked with at the start of my career. Married with children, I went on to discover that he had been diagnosed with lung cancer. He reached out to thank me, the “smart woman” who told him to buy disability insurance many years ago and who talked him out of cancelling the coverage at one time. It’s now helping him support his family as he faces his illness.
The client who is ready and willing to discuss his or her own mortality is rare. Talking about life and disability insurance can be difficult with anyone—both young and old.
We have an obligation to ask the hard questions: “If you were to be hit by that proverbial bus, how do you want your family to live?” Or, “If you were to lose your job tomorrow and not be able to work for the rest of your life, how would that impact your goals?” Or, “What would happen if you or your spouse needed to go into an assisted living facility or needed care at home? Do you have the resources to cover that?”
Often times, clients have not even thought about a disability or long-term care needs.
According to the 2014 Long-Term Care Risk survey by Lincoln Financial Group, an adviser’s ability to address a broad range of planning topics, including wealth protection, estate, tax, and long-term care, is directly linked to client satisfaction. Building this trust means talking to clients about what they might not want to hear now. They will be thankful you took the time to discuss and prepare if something unexpected happens later down the road; because as we all know, the unexpected does happen.
Discussing Everyday Habits
While working through larger issues—present or potential—it’s important not to forget about the seemingly more simple aspects of everyday life. One thing we focus on with clients is their habits, financial or otherwise. We look for ways to change bad habits while acknowledging and enforcing good habits.
My approach for addressing habits starts with a simple Aristotle quote: “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Then, I look into their habits for saving, spending, health, and any other areas important to the client.
Take saving versus spending. Whether you tend to spend more or save more, whether you’re in a low-earning job or you’ve just won the lottery, spending habits are going to affect you. I’ve worked with all types of clients, and I don’t hold back on addressing spending habits no matter what the situation. I always stress that it’s not about how much they make, it’s about how much they keep.
Discussing spending habits is a proven advantage; 80 percent of consumers polled in the aforementioned Lincoln Financial survey viewed cash management as an important planning issue, but only 20 percent reported having addressed the topic with an adviser.
For clients who are entrepreneurs or small business owners, we work to build good habits like doing taxes every month (something few do, but know they should). Despite being busy, it’s important to point out the headache they’ll save themselves at the end of the year if they deal with their balance sheet on a regular basis.
Many clients tell me they want to get healthier or lose weight, but say they’re too busy to do so or make other excuses. For those clients, I recommend activity trackers, like a Fitbit, and then check in on their progress if they want me to. Although it’s not directly tied to their finances, addressing these goals and helping clients stay on track can be a valuable bonding experience, and we all know the effect of good health and longevity.
These conversations and actions may seem ancillary to developing and implementing a core financial plan, but I believe they are key to relationship- and trust-building with a client.
Taking the Past into Account
We all know that our past informs both our present and our future. That’s why, while working toward accomplishing a client’s future goals, it’s important to take their past experiences into account.
Financial advisers are often very detail-oriented, which is great when tracking the intricacies of a client’s assets, insurance, estate planning, or investment portfolio. However, the same vigilance isn’t always applied to fostering the adviser-client relationship. Advisers should not shy away from connecting through shared experiences and learning from personal conversations, always with empathy and sensitivity.
I’ve come to work with several widowed clients who have sought my help after leaving a previous adviser. I find this has less to do with my financial planning expertise than it does with my ability to listen, connect, and empathize.
For example, one widowed client lost her husband six years before she was referred to me. Before that, she had met with several advisers, all looking to invest the $6 million she kept in savings. In asking the staple question during our initial meeting, “What has to happen for you to feel really happy with your life?” I learned that she was afraid her husband had worked so hard to make sure she was taken care of, and all these other advisers could do was to talk to her about the efficient frontier and Monte Carlo simulations. She wanted to talk to someone about her love for her husband, her dreams for their son, and what her life was going to look like in the future (she was only 55). After two hours of conversation about her past and her future, she left a client.
As advisers, we are expected to have superior technical skills, but clients are also looking for someone who is interested in them and their future. Building trust can be as simple as listening and trying your best to understand a client’s needs and what they’re going through.
Setting the Stage for a Team Approach
I work with several physicians at a local medical center, and they’ve helped me realize the importance of asking for help. Doctors have their specialties, and if a patient has a medical problem they’re not familiar with or a question they can’t answer, they direct the patient to the doctor who has the knowledge and experience best suited to address the issue.
I apply the same mentality to my practice, and I believe that an adviser’s services are only as valuable as the team and network they’ve built around them. One of the best things I did early in my career was to bring in other professionals.
Being upfront with clients about joint casework demonstrates your desire to assist them by any means possible. They know you can’t be an expert in everything, and will appreciate you bringing in others to help. They are assured that if something were to happen to you, they would still have a trusted team around them.
I’d implore any planner—from those just getting into the business to those searching for strategies to retain more clients—to have these relationship-building conversations. As advisers, our appetite for knowledge and desire to grow in our profession should be never-ending, and this should also apply to learning as much as we can about our clients in order to provide the best financial guidance possible and earn a place in their future.
Colleen Bowler, CFP®, is a financial planner with Lincoln Financial Advisors Corp. in Dallas, Texas.