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Goal setting is the second step of the client data-gathering process — unquestionably the most critical step in solidifying the client relationship and the key to setting your clients up for success. Beyond offering the technical expertise to help clients navigate the complex realm of financial planning, the most valuable service financial advisors bring to the table is helping them align the use of their resources with the things that are most important to them.
Yet even though advisors are well-positioned in this stage of the relationship to have these critical conversations, encouraging their clients to discuss their financial goals and understanding on a deeper level why those goals are meaningful to them, is a significant challenge for many. They then wonder why the client later chooses to abandon their financial plan or the relationship.
Clients seek out financial advisors because they want help in planning for the future. But what they really want is to work with someone who gets to know them beyond the numbers and understands their values, concerns, and passions. For advisors, that is the key to helping clients make the emotional connection with their financial goals, which creates the motivation to pursue them through a financial plan.
Helping clients share this information, perhaps for the first time in their lives, can be challenging. And if you’re uncomfortable with it, you can be sure your clients are too. Setting your goal setting up in three stages can provide the structure both the advisor and client need to ease through the process.
Stage #1: Start at 30,000 feet
In the first stage, you need to stimulate your client’s thoughts to encourage them to reveal their dreams and life aspirations. You do this by asking open-ended questions and using active listening skills to draw them out. Questions such as “Tell me about your life ambitions,” or “what do you hope to accomplish for you and your family?” encourage the client to speak openly. Your job is to listen actively by acknowledging what they say and drawing them out with “Please tell me more about that.”
It’s also essential to draw out critical insights into the client’s values, beliefs, and attitudes about money, which is crucial because they are more permanent than financial goals. You do that by asking, “Why is that important to you?” Or, “What would having that mean to you?” This starts to build an emotional connection to the goal.
Stage #2: Drill deeper to establish quantifiable and actionable goals
After raising your client’s comfort level by conversing at a high level, it’s time to drill down to set meaningful and quantifiable goals. Again, structure is essential here, which is why I recommend using the SMART (Specific, Measurable, Adaptable, Realistic, and Time-bound) goal-setting method, often used in business settings but highly effective in financial planning. It gives both the advisor and client a way to discuss each goal objectively.
It’s also important to prioritize their goals by rating them against each other to determine the level of urgency for achieving them and how resources should be applied.
Utilizing the SMART method ensures that your client’s goals will be clearly defined and it provides a framework for making adjustments to the goals and financial plan based on changes in the client’s circumstances, risk profile, or their portfolio’s investment performance.
Stage #3: Secure the emotional connection
The psychological component of goal setting is crucial to the process. If a client doesn’t have an emotional connection to their goals, they are less likely to have any conviction in your recommended strategy for achieving them. They may either choose not to proceed or abandon the strategy if they can’t see immediate progress.
That loss of motivation typically occurs when advisors fail to secure or confirm the client’s emotional connection to the goal. These are a few discussion prompts you can use to remind clients of why their goals are important to them.
Ask them to visualize achieving their goals and how that makes them feel. Does it bring a sense of relief, accomplishment, fulfillment?
Have them articulate how they might feel if they didn’t take the steps to achieve their goal. Would they feel disappointment or resentment?
Ask them what would achieving the goal mean to them and their family. Ask them to articulate what it will mean to them if they achieve their life ambitions (which you discussed in depth in stage one of goal setting). You might even suggest that they write the answer down as a reminder to them later when they appear to lose motivation to pursue their plan.
Related: How to Get the Most out of the Client Data-Gathering Process