I recently received an e-mail from a potential client in which he wrote, "I read your article in 'Bottom Line Personal' about setting priorities. I've been to five CFPs and left them all, mostly about priorities. Theirs over mine. ... None of the CFPs ever asked me what you ask of your clients, so you aroused my interest."
Now, that was quite an indictment of those five CFP practitioners. And it got me to thinking about what would make a person believe that his priorities took a backseat to the advisors'. Didn't they ask the right questions? If they did, were they listening to his answers? Did they have agendas that served their needs to sell a product or manage a portfolio? Or were they so arrogant as to believe that they knew what was best for him?
It reminds me of an incident that occurred when I was on a panel to discuss the benefits of "traditional" financial planning versus "life planning." (As I've written before, I do not subscribe to these labels because I believe all financial planning needs to deal with life issues to be effective.) When I outlined our firm's process for uncovering goals and priorities, one of the panel members representing traditional planning stated, "I already know my clients' goals before they walk into my office, so I don't need an elaborate discovery process. They all want to retire, educate their children, get a competitive return on their portfolios, save taxes, etc."
It makes me wonder whether this CFP practitioner was one of the five alluded to by the e-mail sender. Moreover, it concerns me that CFP professionals who have been trained in the financial planning process could fail in one of the basic purposes of financial planning-to help clients uncover, prioritize and meet their goals. I also wonder how prevalent this is. Based on this single e-mail, it may be more common than I ever believed.
It has been our experience that in the initial get-acquainted interview, prospective clients may communicate their general goals to us. However, they reveal far more to us when we take them through our goal-setting meeting(s). Over the years, we have discovered that most clients do not discuss many of their wishes and desires when we ask the simple question, "What are your goals?" In order to get beyond, "I want to retire and educate my children," we need a process that helps our clients discover and communicate what is most important in their lives.
At our firm, we use a financial life planning process we call "Discover, Plan, Live." In the Discovery process, we step away from what our clients have been doing and instead set out to discover what they would like to be doing. It sounds easy. But how many of us ever discover our heart's desire? Dan Wheeler, of Dimensional Fund Advisers, wrote, "Unless you understand where your clients are today and where they want to be down the road, you cannot add value to their lives." And simply asking them to list their goals does not get the job done. As we have written in the past, we discover much about our clients' history, values and goals in the early stages of our relationship. We use the three "Kinder questions" (How would you live your life if you had all the money you needed?
What would you do if you knew you had only five to seven years to live? If you had only 24 hours to live, what are your regrets?)
Armed with this information, we help our clients establish goals to achieve what is really important in their lives. We ask each of them to independently list their goals and classify each as a "core value," an "ought to" or a "fun to" (again, with thanks to George Kinder). For example, a client may list "funding my children's education" as a core value; "giving more money to charity" as something they ought to do; and "buying a boat" as something fun to do. We have often discovered discrepancies between their actions and what they have listed as core values.
Some have indicated that giving to charity is a core value and that leaving an inheritance for their children is something they feel they ought to be doing. Yet when we review their estate planning documents, we may discover that all of their assets will go to the children and none to charity. Having a dialogue about these discrepancies is how we learn what is most important to them and what their priorities really are.
It is important that the listing of their goals be an open-ended exercise, so we do not provide them with a checklist of typical goals. We want them to flesh out whatever comes to their minds. The last thing we want to do is say what goals they should have. Moreover, they are much more likely to take ownership of goals they have written in their own words.
The form we give them lists only the general categories (such as family, career, charity, risk management, etc.). The rest is up to them. We want to know what it is that they want to accomplish more than anything else. If a goal does not come up for them at this time, it is probably not a very high priority.