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I get it I was an advisor for over 20 years. You have clients coming in and they want to know how their performance was in the last year. You start by giving them numbers, comparing what the markets did and because the last few years were strong, and the current one is not, you start to compare numbers. You are thinking you are well prepared for this conversation, until they ask you the critical question on their mind. Are we on track? What is their track? They have numbers and a plan in mind, but not on paper. They leave realizing their track is not the track the financial advisor is following.
Are we on track?
Except when they turn to you and ask the second question, this is where the conversation turns, the trust goes down and it all changes. They ask you " are we on track to reach our goals?" Without any written plans, goals, or empirical evidence, you say yes and you start to dig into numbers and bombard them with logic. You keep talking performance and numbers and talking and talking and they turn silent. Sound familiar?
What were they really asking you? Are we going to reach all of our goals with the money we have saved? What is the probability of reaching all of our goals with our current planning? Except there is a big problem. They don’t have clarity around all of their goals. They have an idea of one goal, retirement and are tracking one goal with one big total at the end so it is easy to calculate. Yet how about their other goals? How about traveling before and after retirement, which can be a big expense? How about their children’s education? Are they on track to achieve that goal? How about helping family members financially? How about their vacation homes or cottages, and second homes or cottage plans and goals? The list goes on, yet you say everything is going to be ok.
Accept that you have to change your conversation
I made this mistake. That is why I am writing to you as a financial advisor advisor to get a deeper sense of clarity around all of their goals. All 4 or 5 or 6 or more of their goals, ALL of them. I remember having a performance conversation with a client feeling confident before the meeting. Then they said they want to do more travel in retirement. No problem I said you have some surplus funds and you should be good. They said they are going on a cruise. I said fantastic where are you going and for how long. They said 6 months around the world. I turned white as my blood rushed from my face. My first thought was, I am not sure they can afford this. How will this impact their retirement? They could see the worry on my face as I knew I had to update their goals, their plan for their future and their estate. This was no simple goal. Yet they were thinking about doing this for a long time. They discussed they wanted to travel, but I never went deep enough. I assumed a trip here and there and they would be fine. But this trip was going to cost a substantial amount of time and money. I never went deep enough to ask them about ALL of their lifetime goals and dreams.
I started getting 6 goals from every client
This changes everything. Performance is important but must be in relation to their goals. I struggled as an advisor to get goals from my ideal clients. Then it hit me clear as day the conversation has to change. Now I coach financial advisors goals-based planning through practice management processes. Don’t get me wrong, performance is critically important, but it is only one dimension of the conversation. When a client goes to your competitor and has a deeper goals conversation that also taps into the client's values, usually no amount of performance is going to stop them from moving their accounts.
I started with the implementation schedule
I get it. You put together a plan, which some want and some do not. You spend hours trying to update it, and only in times like these do you update it. Try something different. Elite advisor start with the schedule of advice to reach your goals. Instead of "are we on track" try " we are on schedule". An implementation schedule which is a list of advice to help them reach their goals. What does the schedule say we need to do and approximately where are we on the schedule? Remember update their goals, not their plans.
Ask this in your next meeting with a client
If I help you get solid performance and reach all of your 6 goals mapped out with clarity and put it on paper and a plan, are you happy with me as an advisor? The client usually answers yes. Now if I help you hit all of the performance benchmarks, but we don’t quite reach all of your goals are you happy with me as your advisor? The client usually answers no. So what is more important, performance or performance in relation to your goals?
Great questions to ask
Have your goals changed in the last three, or four or five years? Most clients would answer yes. Then open the conversation about their future. Use the attached list to spark the conversation. What else would you like to accomplish in your future from this list? Check off your own personal goals as you are reading this article. How many goals do you have? Do you have a plan to help you accomplish all of your goals? Emotionally engage your clients and prospects with pictures of their goals. Then watch their body language and see their confidence in you soar making it a great meeting beyond just performance.
Scripts- A great read
Do you have a script for these conversations? I work with elite financial advisors to help develop their scripts for their ideal clients. If you don't have a script for your "goals-based progress update meetings" then get one. Nick Murray in his book Scripts https://www.nickmurray.com/books/ outlines these conversations. Get the book and you will see why Nick Murray shows elite financial advisors "what to say, and exactly how to say it". As he says on page 18 " All successful investing is goals focused and planning-driven. All failed investing is market-focused and current outlook-driven."
Goals-Based Planning Exercise
____ Lifestyle - Retire / slow down / part-time
____ Debts- Debt reduction-debt free
____ Education – Children / Self
____ Vehicles – Cars / Boat / RV / collector
____ Major purchase – Vacation property / Lifetime Trip
____ Travel -Vacation property / Trips / bucket list
____ Health care – Family members / personal health
____ Home – Reno’s / Upgrades / downsizing
____ Celebrations- Weddings / birthdays
____ Estate- legacy- family-wishes
____ Gifts- donations / charitable involvement
____ Volunteer – Philanthropic goals / legacy
____ Care for someone – elderly / family
____ Business – Investment / opportunity / sell business
____ Career – education / changes / courses
____ Memberships / Hobbies – golf or sports clubs / groups / collections
____ Wealth protection and wealth transfer -succession planning to family
____ Wealth enrichment – asset protection strategies
____ other goals that come to mind?
“Everyone needs and deserves a comprehensive financial and investment plan.”
Related: Why Less Is More When Scaling Your Practice