For the past few years at the Financial Life Planning Institute (FLPI), we have been researching the impact of life transitions and life goals on a client's financial well-being. In our research we differentiated transitions and goals this way: Goals are what people want to happen, and transitions are what is happening. The bottom line, we have discovered, is that financial professionals are much better off getting and staying in touch with their clients' transitions first--as those are the issues that have the greatest impact on a client's financial status and well-being at the moment.
FLPI research has uncovered 65 life transitions that we can expect to take place between the anticipation of the cradle and the retrospection of the grave. As individuals we do not pass through all of these transitions because of our unique family and career circumstances, but we all will pass through a multitude of transitions in our lifetimes.
These life transitions fall into four categories: personal/family, ca-reer/work, financial/investment and community/legacy. We have developed a checklist (Life Transitions Profile) for financial professionals to administer periodically to clients so they can indicate the changes in life they are faced with and are most concerned about. The full list is at flpinc.com.
Recently the FLPI completed a national survey on the "Top Ten Life Concerns" of more than 3,000 advisory clients. It is ironic to note that many of these top ten concerns are rarely mentioned in the typical advisor-client conversation or industry literature. A classic example of this is the number one concern, "Concern about an aging parent," which was far and away the top concern but is scarcely surveyed by the typical advisor. Others that made the top ten list include "Reevaluating my investment philosophy (people are looking to anchor their plans in sound principles and stable investment philosophy) and "Phasing into retirement" (something other than old-world, cold-turkey retirement).
To look at the literature from most firms, you would assume only three transitions or concerns occur in life (college, retirement and death) rather than 65. Could it be that the industry lacks the education to engage in meaningful conversation about the other aspects of life and/or lacks the imagination to see how their products and services could be utilized to meet the needs of these transitions? I suspect it is a little (or a lot, as the case may be) of both.
A director of training for a prominent firm in the financial services industry made a pithy observation on the dearth of "real life" advice regarding a life transition he and his wife passed through recently--their daughter getting married. He said, "We just experienced the biggest financial distribution we will probably ever experience, and we were in no way, shape or form prepared for the impact. Not only did we see our investable assets take a major hit, but also our plans for the future were profoundly impacted as well. This is a conversation we wish we would have had ahead of time."
The most prudent place to focus your primary attention is on the here and now and the near horizon--real life as it unfolds before your clients' eyes. And, with this focus, you will continue to have opportunities because life never stops changing. Every time life shifts there may be a need to respond financially to it.
"Take no thought for tomorrow. Sufficient for today is the evil thereof." These famous words from the Sermon on the Mount make for good guideposts for an effective inaugural and periodic touchpoint client dialogue. There is a time and place for a goals conversation. But that time is after all of today's concerns have surfaced and have been addressed.
Dig deep into the here and now and you'll find no trouble making connections for the sweet bye and bye.
Mitch Anthony is founder of FLPI, which educates, trains and develops tools for financial advisors.