Leading and Loving: The Key Ingredients in Financial Life Planning

Mitch Anthony

Real financial planning starts where life planning leaves off. You don’t start with a financial plan and then work a life plan into it. You start with a life plan and then build a financial plan to support it. This approach changes the model many financial advisors are used to working with and also affects what advisors should be compensated for in the minds of their clients. Compensation, as your client sees it, is not tied solely to transactions because your client clearly receives more value from the discussion the two of you have than from the facilitation of a trade. Because your client doesn’t need you to simply facilitate a transaction, the services they are willing to pay for (whether through commissions or fees) is relevant and customized advice that helps them negotiate key life transitions…in other words, financial life planning.

How can you make the fundamental and philosophical shift with your clients from a transaction-oriented style to a transition-oriented approach? One advisor told me that for him it starts with the very first positioning statement he makes with his clients: “Money is a means, not an end. More important than building a pile of money is building a plan for that money. That plan will be as unique as you are.  That’s the reason I’m going to ask a lot of questions about your life, your dreams, and your plans––as well as about your money.” I couldn’t have said it better.

The issues that people deal with on a daily basis aren’t whether the markets are up, down, or sideways, or whether they own the right mutual funds. The issues that your clients deal with on a daily basis are about their children, their grandchildren, their health, their careers, and how they’re going to keep going during this Great Recession. But even during times like these, we continue to dream. These dreams contain the abstract ideas of what we could and should be in our lives, as well as the thoughts and visions of what we could do and who we could be if we could sit down with a map and figure out the route from here to there. This is where financial life planning comes in.

Your clients are trying to run their lives, while managing their money. There’s a difference, although the two are inextricably bound in their minds––one affecting the other. No matter how much money each of your clients has (or doesn’t have), chances are that during the course of a day they will think more about their life and where they want to be than they ever will about where their money is. What it comes down to is this: for clients, money is a means to an end. Do you understand what that end is for each of your clients? Such awareness is the beginning of transition-mindedness––the foundation of financial life planning.

Where can you provide the most value for the client? While the answer to this question will be as varied as the number of clients you have, typically you can provide the most value by helping your clients through a change that they might be going through, anticipate going through, or want to go through. You need to hone your skills in helping clients anticipate or deal with changes in their lives by exhibiting equal parts of love and leadership: 1) love, to demonstrate you understand your client’s unique goals and objectives; and 2) leadership, to help those clients achieve their goals.

A life change event is a very personal transition, and there is almost always a financial element associated with it. This gives you the opportunity to provide relevant information on matters that are personal to your client at a time when that client really needs the advice. It’s your opportunity to shine and help your clients not only cope with the present, but also examine the future.

If you are aware of the basic changes that your clients go through and you have raised your antennae to the predictable changes, you can increase the value of your relationship with your clients by being there as a partner, guide, and educator as they navigate through these changes. One of the biggest reasons to keep in touch with your clients is because they need your services on their schedule––not on yours. A meeting once or twice a year can’t achieve that.

When something occurs in your client’s life that was unexpected, they are going to want all of the advice they can get. Those advisors who believe that they only need to update their information on clients once or twice a year, will soon find that their clients have gone elsewhere. I’m not suggesting that you have to be on the phone every month like an ambulance chaser looking for accidents, but you should have a regular communication schedule that will keep you in touch with your client and what’s going on in that client’s life––as much as possible. 

Transition management tends to be reactionary. You are asked by your client to do something because a life change has required a financial transaction of some sort.  There often isn’t a lot of counseling involved because the time for your advice came during the planning that your client made earlier. This is particularly true if your relationship with your client has only been based on financial products or you have limited your role to simply managing money.

Think about how your own life has evolved to this point. What transitions have you gone through? What transitions do you expect to experience in the next 10 years? The next 20 years? As you sit across the table from your client, what changes do you think that he or she might be contemplating? While no one can predict the future, financial life planners are in a better position to help their clients take control. And who doesn’t like to be in control?

Transitioning from one life stage to another can be a very emotional passage; just think about the death of a spouse or a change in career. When we move from one phase of our life to another, we experience movement and change. The ability to leave our past stage behind and embrace our new stage is often a function of acceptance, rationalization, planning, and goal setting. Financial life planning helps you and your clients anticipate and understand the normal transitions that they are likely to experience and create a fulfilling vision of the new life phase, whether that new phase is welcome or not. You can help paint a vivid picture both by your inquiry (love) and financial advice (leadership) that connects directly to the transition issue.

Remember when turning 62 meant “retiring”? Whether by choice or not, that’s very seldom the case anymore. Even once-predicable life transitions have become unpredictable when it comes to anticipating when your client will pass through them. For this reason, it is important to focus on the individuality of each client.  For example, as intimated above, not everyone wants to retire in the traditional sense––and many people can’t. A major flaw in how we plan financially is that certain issues pertain only to certain age groups. While certain issues may be front and center for most individuals in a particular age group, it is risky to assume the same for all members of that group. That’s where financial planning ends and financial life planning takes over. It’s where love and leadership move you from transaction to transition…and you become a true trusted advisor.

Adapted from Your Clients for Life:  The Definitive Guide to Becoming a Successful Financial Life Planner by Mitch Anthony (©2006 by Mitch Anthony).  Click here for more information…

Mitch Anthony is the founder and president of The Financial Life Planning Institute, the leading provider of financial life planning tools and programs. 

For more than a decade, Mitch and his team have provided training and development for both individual advisors and major organizations throughout the world. Mitch personally consults with many of the largest and most-recognizable names in the financial services industry on both financial life planning and relationship development.

Mitch has been named one of the financial service industry’s top “Movers & Shakers” for his pioneering work, and is interviewed by the media on a regular basis. The Institute is partnering with both Texas Tech University and the University of Georgia to develop financial life planning programs for their undergraduate programs.  Mitch is a popular keynote speaker, columnist for Financial Advisor magazine, and host of the daily radio feature, The Daily Dose, heard on approximately 100 radio stations nationwide.

Mitch is also the author of many groundbreaking books for advisors and consumers, including From the Boiler Room to the Living Room, StorySelling for Financial Advisors, The New Retirementality, Your Clients for Life, and Your Client’s Story. For information on these books and more resources, click here.

Contact him at mitch@mitchanthony.com.

© 2008 Mitch Anthony