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Don’t Make Your Clients Crash Diet

Trying to alter your life to fit a cookie cutter financial plan is like trying to eat based on a fad diet. It may work, but it requires a large degree of discipline and will likely only be achieved short term. Why? Because it’s simply forcing a process that is not enjoyable, or in many cases, tolerable.

By having the financial plan fit the client’s wants as opposed to vice versa, clients are getting the opportunity to actively participate in a plan that is putting in work for them, not that they have to work for.

So, how do we create such a plan?

We’ll start with another question. When money isn’t the focus, what do people want? Put simply, the answer goes beyond “money.”

In the abstract, it’s easy to proclaim that we want more money. After all, who amongst us couldn’t use extra spending cash? But while financial services professionals are right to think in terms of dollars and cents, planning based on simple numbers can lack meaning. Enter goal-based planning.

Goal-based planning, the practice of creating a financial plan to achieve the plan holder’s goals, has become an increasingly popular financial planning method. Goal-based planning is a step in the right direction for the financial services industry. It allows financial advisors to focus on what their clients want, as opposed to abstract numerical goals. But goal-based planning is still only one part of a client’s entire picture.

Goal-based planning lays out an individual’s wants, but it can often miss something key: prioritization. Yes, financial advisers can prioritize goals for their clients. But are they establishing these priorities based on what the client desires? 

What about having the client express the prioritization behind their goals for the sake of themselves and their own happiness?

Perhaps a client does not want to prioritize retirement. Perhaps she wishes to prioritize travel. Perhaps a client will scrimp and sacrifice for the sake of their children’s university tuition.

These are mindsets, not attitudes. They are not permanent states of personality, they are perspectives that will likely shift according to where a client is in his or her life.

How can you take this level of understanding and actively apply it to your relationship with your clients? Voyant is currently working on a project that will make it easier than ever to understand and help prioritize your clients’ mindsets. In the meantime, here are guided questions to help: 

What’s The Single Biggest Motivator For You – Right Now?

Retirement is a mainstay staple you’ll see in many financial plans. While making sure your client has a healthy retirement planned is a good inclination, it’s important to realize your clients may be prioritizing other goals ahead of it.

You might see this often with clients who have children. Other goals – including retirement – matter less to them in the present than the wellbeing of their children. They will gladly work a few extra years or downgrade their homes for the sake of their kin. Knowing this will help you financially plan with this dogma at the forefront of your decisions.

Ask your clients what their single financial driving factor is – at present. Make sure to help your clients understand this perspective has the flexibility to change in the future.

Can You Tell Me Which Goals Are Wants And Which Are Needs?

It’s easy to look at a financial plan and prioritize, say, retirement over a yearlong travel excursion. But who are we to say what a client should or should not value? Ask your clients to tell you which goals are in the “want” camp and which are in the “need,” and get more granular from that point forward. Knowing this will prevent assumptions and forcing your clients to de-prioritize goals that are important to them.

What Page Is Everyone On?

Just because they come in a pair, doesn’t mean their perspectives are identical. If you’re working with a couple, it is vital to understand and validate each of their perspectives. Creating a plan that takes into account both of these perspectives can be a daunting task. However, imagine how much more difficult it will be to undo a plan when it’s been created for one partner and the other chimes in with totally different opinions!

The fix? Work with each partner separately, in tandem with one another. Have them each create a list of goals and their respective priorities. Then create a plan that accommodates both perspectives.

Bottom Line

You’re the financial professional, you have the knowledge. But working with your client will be significantly easier if you begin your journey with your clients by letting them take the wheel. You’ll be there giving directions, but allowing them the opportunity to direct the course will prove empowering.