|“Attitude is a little thing that makes a big difference.” — Winston Churchill
In a study conducted last year by the FPA and other research partners, “The State of Client Understanding,” several interesting findings were shared. For those of you who already embrace life-centered planning™, the findings are not a surprise as much as an affirmation. The study discussed how the future of financial planning belongs to advisors who:
- Know their clients at an in-depth level;
- Act as behaviorists by helping clients recognize and resolve the differences between what those clients say and what they do; and
- Encourage more than one family member to participate in decisions.
My interpretation of the study findings is that, while having enough money is obviously a critical component of any financial plan, it is one of several factors in the decision-making process. Any advisor can recommend investments, but the most successful ones help their clients attach meaning to those investments.
The future of financial planning isn’t based on a number—it’s based on helping clients achieve balance between means and meaning.
I recently received a letter from a reader of my book, The New Retirementality. His story clearly illustrates just how important having purpose is*:
I retired from a sales position with a good company after 17-1/2 years of service and couldn’t have felt better. The last several years were unfulfilling and uninspiring and despite just “going through the motions” and dealing with the drudgery of everyday work life, I managed to earn a six-figure income for a total of nine years. What could possibly go wrong for a single guy not even 51 years old with hardly any debt, and a nest egg of about $1.3 million? I have a bachelor’s degree in Finance and used to work as a stockbroker right out of college, so I knew so much more than the average person and my peers about saving money for retirement and had the number crunching part of the retirement equation down. Unfortunately, the number crunching part of the equation was all I thought I had to be concerned with. How wrong I was!
I spent February renting a beautiful home in a gated community in my favorite vacation destination of Jamaica with the intention of planning what I was going to do next with my life. What a great escape from terrible Milwaukee winters and with no pile of work to return home to! I spent a good portion of the summer at my summer retreat in northern Wisconsin. I made it through the fall with dealing with boredom and my gut in a knot due to the stock market correction. It was back to the same rental home in Jamaica, this time for February, March, and the first week of April. Different friends came down to Jamaica for a week at a time to stay with me and all seemed good. After all, the stock market recovered the previous quarter’s losses and then some. But still something was missing.
Fast forward to a meeting that I had last Tuesday with my financial advisors. They asked me how my retirement was going, and I couldn’t hold back the tears. My investment portfolio is in fine shape. Money isn’t the problem. I’m the one that was a mess. I could no longer hide my feelings of isolation, boredom, aimlessness, and discontentment. After talking about things for a while, they gave me your book and asked if I would be willing to read it. What an eye opener it was!!
Given the strategies and recommendations in your book, this week I have taken two steps to begin living again. Yesterday, I went to sign up to volunteer for Project RETURN in Milwaukee, an organization that provides job search education and other resources for those recently released from prison so that they can stay out and become productive members of society. And tonight I am participating in a food sort at the Hunger Task Force in Milwaukee. I never thought that I could be so excited to volunteer my time! I can’t wait to get there tonight and meet new people and work together for a good cause! And these feelings are coming from a guy who would never even think of volunteering anywhere. In the past, I only wanted to take the time to make money, which I mistakenly thought would make my life better.
This isn’t the first time I’ve heard (or read) a story from someone who had the means but lacked meaning. And I never get tired of receiving letters like this. His advisors asked the right questions, and helped this man turn his life around.
Life-centered planning represents the future of the financial services industry. As the study cited above notes, advisors who embrace knowing their clients—warts and all—will succeed. These are the advisors who understand that money should support your purpose, and not be the purpose. We’ve already seen how younger generations are more interested in experiences than accumulating “stuff.”
Knowing your clients at an in-depth level starts with asking the right questions and embracing the role of behaviorist. It includes engaging them in conversations that help them focus on more than a number. This is especially true as your clients think about the next stage of life. Get the ball rolling by asking them the following questions:
- How will you spend your time? You have 168 hours a week. How will you make it meaningful? Having your clients compare how they are spending those 168 hours now, and how they plan on spending them later, will prove eye-opening to them. My guess is your clients will see a lot of gaps that need to be filled in.
- How will you invest yourself? How will you parlay what you know, what you’ve experienced, and who you are into the next phase? After your clients have completed how they will be spending their 168 hours, this is a natural next question—they will realize playing golf or tennis for six hours a day will get old fast. For clients who aren’t as close to retirement, the exercise can help them get a handle on what they want to focus on going forward.
Asking simple but probing questions like these will demonstrate to clients that you are interested in them as individuals, and not just part of your AUM. They’ll appreciate that you’re not following a one-size-fits-all model. You’ll soon discover that those clients will share necessary and insightful information to enable you to make better recommendations and help your clients achieve their goals. In fact, don’t be surprised if they start referring other family members and friends!