Whether it’s your first day in the business or you’re hitting a major milestone, you’ve probably had a run-in with compliance that left you feeling frustrated. My own patience was tested yet again when a compliance officer reported that I had to remove the term “peace of mind” from my company literature because the powers that be deem it “promissory and misleading.”
Although I wanted to respond with a lengthy soapbox speech that boldly stated my beliefs, values and experiences, upon further reflection I began to realize the regulators are right … albeit it in an old and outdated way. If suggesting “peace of mind” can be created with financial products and services alone, they’re spot on. However, as life planning and retirement wellness concepts continue to evolve and change the way people think about and actually transition into retirement, new standards are being set. One where “peace of mind” can be achieved by combining financial products with programs that foster personal awareness and well-being.
Unfortunately, too many financial professionals are still hesitant, unprepared, or even unaware of how best to combine their financial expertise with advice to help clients reduce their stress, increase confidence and live a happier, healthier, more connected retirement. To resolve this gap, I have established some basic groundwork that we can all use as a catalyst for “peace of mind.”
The Difference Between Personal And Financial Answers
Advisors often paint themselves into a corner by giving the impression that they can fix or improve things through more savings, greater returns or fewer losses. Fact is, there’s too much emphasis on our ability to fix, predict or know everything … and that shouldn’t be the case. Instead we can approach a client’s situation in a way that balances our financial skills and knowledge with their personal preferences in order to identify the answer that will position them to experience the least amount of anxiety and most joy in retirement.
Take, for example, the issue of being debt or mortgage free before entering retirement. On the surface it seems like a no-brainer, but surprisingly, there can be major disagreements among professionals on the topic. Some advisors may feel that, since interest rates are low right now, clients should avoid paying off their mortgage and instead invest those extra dollars in a higher-yielding asset. That may be the usual “financial” answer, but it’s only one side of the story. No doubt people love the idea of money working harder for them, but some obsess and feel anxious about debt hanging over their head. Their money may be working harder, but they won’t feel better until the mortgage is paid off.
Therefore, if we truly want to help create peace of mind, when a client asks if they should pay off their mortgage and invest the funds, we need to step back and let them know there is more than one way to answer the question and that it depends on them as much as the dollars and cents. Some people sleep better at night knowing their money is working harder for them, while others find greater comfort in knowing they don’t have to make that hefty mortgage payment. The key point is that by simply walking a client through this approach, we take the onus off us and share it with them. Since neither answer is superior to the other and people with different personalities come to different decisions, we not only shift the focus from fixing to educating, but as a result, teach them how to make decisions that bring the least amount of stress and that provide the most joy. That translates into real value-added and will function as a tool for loyalty and referrals for years to come.
Investment Products Aren’t Good Vs. Bad
If you want to start a fight among advisors, the most direct route to fisticuffs is a product debate, especially one about annuities and life insurance. Whether you’re for or against these products, there’s another pillar of peace of the mind that can shed positive light on our industry instead of another black-eye.
No matter how you slice it, financial products were created to solve a problem for certain types of people and their unique situations. We may each take a different route to the grocery store or exercise in different ways, but if we get to the store and keep fit in a way that we feel works well with other aspects of life, we’re likely to achieve a higher level of peace of mind. The same holds true for investing. One way is not better than another and once again, personal preferences can play a major role in how one feels after making an important decision. So we need to scrap the words “good” and “bad” when debating financial products and services and simply insert “appropriate” or “inappropriate.” It allows us to once again reposition the conversation and focus on the client’s situation instead of our differing roles and beliefs as practioners.
Some may stubbornly think, “I’m not going to support products or services I don’t believe in.” But, when we pit "good" products and services against "bad" products, we teach investors that a product or service will change how they think or feel. And that may be true in some cases and for some time, but it’s also only temporary. When things we can’t control change, and they will, we lose the client, and the industry suffers because what “we” said would work didn’t. Reality is, every financial product shines and dulls under different market conditions, and so instead of using derogatory terms to label what others do as negative or to market ourselves above others, we can foster better outcomes by assigning more flexible terms that can adjust as their lives or market conditions change.
Create A Life Planner Standard Instead Of A Fiduciary One
Another premise that has gradually become more prominent on path to financial peace of mind is the concept of life planning. The general idea is that there’s more to a client relationship than what is in their IRA or bank account. By taking the time to delve into what makes a client really tick, advisors can craft a better plan. At its core, this powerful and moving approach makes the fiduciary standard seem unnecessary. When you truly know clients and what’s most important to them, you can do more than only what you think is in their best interest.
Despite the approaches, positive energy and encouraging direction, it’s not as simple as having the client fill out a couple extra questionnaires. It’s a personal philosophy that advisors have to whole-heartedly adopt and garner new skills, alliances and support for. It will take, time, energy and money, but if we want our industry to be able to claim it provides peace of mind, we should all be pushing for a life planning standard instead of a fiduciary one.
Providing peace of mind to clients means advisors must acquire new skills and resources and combine them with our existing financial expertise. Doing so will allow us to ease client concerns about health-care costs, running out of money, Social Security benefits, adult children, aging parents, losing a loved one and more. It’s simply a matter of bringing personal as well as financial answers to light, changing our language to avoid labeling people and products as good or bad, and adopting a life planning approach that helps clients live a happier, healthier, and more connected retirement.
The compliance departments may have the upper hand on those of us who want to include the concept of peace of mind in our literature, but by changing who we are and what we do, we may be able to eventually change their minds as we change the lives of our clients. After all, bringing true freedom and peace of mind to retirement requires more than financial products. It comes from a commitment to the client’s overall well-being.
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].