Is Your Firm Focusing on the Right Financial Decisions for Clients?

The big life decisions—new jobs, college choices, buying property—are significantly more important to the majority of people than their investment portfolios according to a recent survey. Financial advisors should keep this in mind and adjust their approach to relationships with clients to remain relevant and improve customer retention.
In a recent study, the overwhelming majority of people polled—60%– say that the important moments in their lives had to do with their work, and 48% of those polled also connected their job with their low points as well. Spending was ranked as the second most important thing in people’s lives—30% of respondents attributed their high points to it, 40% their low points. However, saving and investing accounted for just 5% of the respondent’s high points in their lives—even fewer for the low points.
This points to a clear need from financial advisors—for advisors to be truly effective in their roles of financial planning for their clients, more time and energy must be spent on “soft” areas in their client’s lives.
Financial advisors must expand the types of questions that they are asking clients to find out what matters to their clients and their lives—not just how much to save for retirement, but to find out why they work and what they desire their money to do for them. It’s also suggested that wealth management advisors lean on their experience to guide the clients during critical moments to help them achieve their goals while demonstrating tradeoffs for their decisions and helping clients understand what may come from their actions.
It’s important for wealth advisors to distance themselves from being just a source of investment advice and attempt to become somebody essential to the client’s life decisions—advisors can succeed with this by changing how they measure and demonstrate their performance—switching from investment goals to life goals.
Most wealth planners are still caught in the rut of simply focusing on helping their clients save as much as possible—investing wisely and building the biggest nest egg they can. But can advisors claim that they earned their fees if clients have sacrificed everything for their future security—never doing the things that they cared about? How can financial planning advisors switch to more of a life manager role and earn their fees helping clients do the things that are important to them? Here’s a few ways that advisors can make the shift to helping people live the lives they want:
Understand what it is that your clients want in their lives and why they want it.
One of the biggest roadblocks for wealth managers is closed-end questions. Advisors tend to find out when their clients desire to retire, what they want to spend in drawdown years, and yet, very few advisors spend the time asking clients what their ideal life may look like, why they do the work that they do, and what they really want out of the money that they earn. The answers to these important questions should drive every minute of planning and goal making afterwards. However, the majority of wealth management advisors view this as ‘soft’ financial planning territory, and a large majority of advisors are uncomfortable entering this territory. This is important to take notice of—when clients need to make tough choices (and they will at some point in the future), understanding the “why” is crucial to evaluating alternatives.
Identify blind spots and holes
Most people overlook experience as a qualifiable asset, but it’s one good way wealth advisors can become more valuable. It is the financial advisor’s job to help their clients understand and see the consequences of their decisions, helping them understand when biases might be holding them back from looking at the big picture, and guiding them as they make tradeoffs during their life. Advisors should be the person that clients come to when they need a sounding board for the big financial decisions they make in their lives.
Measuring life improvement—not just investing.
All financial advisors use investment benchmarks but what about measuring improvement of life? Recent studies show that clients want to know how their entire life has improved and desire to be reminded of it regularly. It is crucial to a client’s happiness that advisors measure and track life improvement beyond investing—and reinforce it regularly.