I recently attended the Financial Advisor Retirement Symposium and was impressed with the attention given to the financial life planning (FLP ) topic. Not only did several presentations target it directly, they were well attended. Being that most advisors are connoisseurs of engaging questions to use with clients, the group was furiously scribbling down many of the questions designed to unlock the so-called secrets of a client’s money thoughts and behaviors. It is exciting to see this revolutionary trend finally going mainstream, but its practical applications can be cause for concern because new and untrained advisors may approach it without understanding the big-picture implications of employing this approach.
First, many practitioners at the conference had decades of experience and were at reflective points in their careers. Over time, and through trial and error, they have created a proven way of digging deeper and connecting clients’ emotions with their money. Unfortunately, too little time was devoted to the downside, things that can go wrong, situations to avoid, or even the best practices for advisors who want to start integrating FLP into their practice.
Having spent my early career as a social worker doing individual, group and family therapy as well as facilitating group lectures, meetings, and workshops, I have amassed a treasure trove of mistakes and awkward situations, while developing key starting points. What I learned can not only save advisors years of work and unnecessary client confusion, it can also highlight new and different ways to make the retirement planning process more personal and meaningful.
The Context Of FLP
One of the most important things about financial life planning is the outcomes you hope to facilitate. When you ask questions such as, “What is your first memory of money?” or “What did you do with your first paycheck?” advisors may get the client’s "aha" moment that connects their current behaviors (excessive saving, overspending, avoiding risk) with their past, but they may also unearth issues that go beyond financial concerns.
Furthermore, an advisor’s own perceptions can get in the way. We all have our own thoughts and ideas about what it means to be successful, what an ideal portfolio looks like or what a perfect retirement is. Not separating your own thoughts and feelings from those of a client can create unnecessary tension at the onset of the relationship. That makes it crucial for advisors to not only go through and complete the process they plan to use with clients, but also to understand the need to focus on the client’s needs and desires, not their own.
FLP also brings into question how an advisor will sympathize and/or empathize with a client. What do you do when a client breaks down in tears? What comes after they disclose a family secret, reveal an addiction, sexual abuse, abandonment issue or ask if you know the therapist they are currently working with? his stuff is not covered in typical advisor training, which is why I encourage you to think about and practice your response to these types of client revelations. It’s a form of soft skills training and role play that I have begun to offer, and advisors should expect to see more of as they begin to integrate these new methods into their practices.
If, for example, a client divulges an issue from deep in their past, how will you respond if they ask you to answer the same questions? What will you do if a client begins crying? Will you reach for a tissue, pat their hands, or provide a hug? This is important because your interactions lead to expectations. If you don’t typically greet clients with a hug, but are now hugging them or patting their hand, what happens the next time they come to your office? Is a business-like handshake okay, or do you now have to hug? It may seem trivial, but again, if you’re not a touchy-feely person, should you be asking touchy-feely questions in your office?
The Need For Ongoing Support
Another issue evident across the FLP spectrum is the small amount of attention advisors devote to follow-up. We often criticize clients and investors for having only a “buy” strategy without a “sell” strategy. The same holds true for many FLP advisors. They use a lot of challenging and thought-provoking questions during the discovery process and are successful in developing a deeper initial connection. However, the effectiveness and relevancy of that connection can diminish unless an advisor uses tools and resources on an ongoing basis to teach clients how understanding their personal situation can lead to better financial decisions.
This becomes very evident when actual client face time is quantified. The harsh reality is, advisors simply can’t provide sufficient support for this type of planning by allocating 10 to 15 minutes before and after each portfolio review to the personal stuff. Even if an advisor demanded quarterly meetings, that would equate to just 2 hours per year when the advisor integrates a client’s personal foundations with their financial reality … not nearly enough time to do it effectively.
So let’s be real. How many times have you heard someone say, "I was sitting in my financial advisor’s office when my life changed dramatically."? Sure, it can happen, and it might become a common experience once more professionals adopt FLP to their practice. But we’re not there yet. Many of the FLP topics and questions take time to digest, reflect upon and integrate. Plus, each individual figures things out, makes connections and has aha moments at different times and in different places. Thus, advisors need to provide support tools and information that foster reflection, regardless of the point in time.
The good thing is, it doesn’t take rocket science to accomplish thorough FLP. It can be as old school as clipping an article and snail mailing it to a client. It can be done through a social media share, blog post, or adding a non-financial section to your monthly newsletter. It’s the primary reason I created the Retirement Wellness Report. Whether it’s at the end of the month or quarter, it’s a non-threatening way to re-engage a client at that deeper level and beyond the four walls of my office. By sending a non-financial newsletter that is action-oriented, visually appealing and psychologically stimulating, I can simply ask if they liked any of the recent articles or insights and it allows them to open up and steer the personal part of the conversation instead of making me responsible for it. Think of it and similar tools as a warm opening to the personal part of your relationship. After all, we all know that support is the basis of any good practice, relationship or personal success. Therefore, advisors who want to dig deeper into an investor’s financial thoughts and behaviors must be prepared to also seek out follow-up tools and solutions.
Best Practices To Getting Started
The beauty of FLP is that there is no best way to do it. Some advisors demand that all clients go through a lengthy FLP process; others just sprinkle in a few questions here and there. It may surprise you, but I’ve found that the best place to engage people on these deeper issues is in a group setting … and I focus exclusively on retirement’s entry point.
By targeting this specific niche, I concentrate my efforts on a select group of issues and concerns while offering them specific tools and resources… and positioning myself as a solution to their concerns. Furthermore, by establishing exclusively with this cohort, I build rapport, am seen as an expert and, through shared experiences, impart a certain “wisdom.” Additionally, since baby boomers are responsible for a large portion of their own retirements, many are deathly afraid of making a mistake. They don’t want to get burned, and when they find others who feel the same way, they become comfortable enough within a group to open up and engage with the advisor and others.
By offering FLP-based workshops that connect the personal lives of prospects and clients with their retirement goals and dreams, I avoid some of the one-on-one challenges in an office setting and provide a realistic perspective on what retirement can mean in an everyday life setting. More important, I foster trust, which is the foundation for a successful money management relationship.
Granted, this approach to FLP may not be for everyone, but for beginners, it provides a framework to accumulate knowledge and experience while avoiding uncomfortable or sticky situations. And yes, people do cry in my workshops, and at times a family secret or two has been revealed to a group of strangers, but usually the group empathizes, sympathizes and consoles at a lower level of expectation than in an office setting.
Furthermore, a workshop setting is very different than seminars traditionally conducted by advisors. There’s no pontificating on the dangers of running out of money or having a specific Social Security strategy. You merely ask them to think about, write down and share answers to questions that no other advisor has ever asked them. When clients do their own work and make the connections, you dramatically increase the odds of having a positive impact in their overall well-being.
The outlook for financial life planning is brighter than ever. More and more successful and experienced advisors tout its benefits at conferences like the Retirement Symposium. However, advisors interested in adding FLP to their retirement planning process really do need to understand all that’s involved. While there are powerful benefits to asking deeper, more personal questions, there is also a responsibility to develop the necessary skills and experience, to meet client expectations and provide ongoing support.
Robert Laura is President of SYNERGOS Financial Group, founder of RetirementProject.org, creator of the Retirement Wellness Report and DividendPaycheck.org, He can be reached at [email protected].