Advisors who adopt a life planning approach in their practices typically benefit from higher client retention, a greater share of wallet and more referrals.
For life planners, traditional financial planning has become a commodity — and their approach is what differentiates them. “My clients trust me and often come to me for advice on things that are unrelated to financial planning,” says Prem Malik, a chartered accountant and financial advisor with Queensbury Strategies Inc. in Toronto.
Here are some techniques to incorporate life-planning strategies into your practice:
Build rapport with your clients
You must build rapport with your clients to get know them personally — not just as investors, but their lifestyles, dreams, likes and dislikes and who they are in general. “The real value is in stronger client relationships and the ultimate outcome is in trust, retention, higher share of wallet and referrals,” says Jane Olshewski, manager, Financial Life Planning with Investors Group Inc. in Winnipeg.
Essentially, “a life planning approach helps them to understand you better and you to understand them better,” contends Michael Lem, vice president, investment advisor and financial planner with BMO Nesbitt Burns Inc. in Thornhill, Ont.
Ask open-ended questions
To get as much information as possible, including answers to difficult questions, you should use effective probing techniques. A good way to do this is to ask open-ended questions. For example: “What are your life’s dreams?”; “Tell me about your family.”
Be a good listener
You should pace rather than lead your clients and be a good, intelligent and empathetic listener. By putting them in a position of power, they are more relaxed and are more apt to telling you what you want to learn about them.
Do not ignore your clients’ non-financial life goals
In traditional financial planning, the focus is typically on retirement, children, education, parents, and other hard asset issues. However, although these are important, your client may want more out of life. So, make sure you do not ignore their non-financial life goals. “A lot of clients are used to having their life goals ignored when advisors focus purely on the quantitative aspects of financial planning,” argues Malik.
“Most clients expect a detailed factual, approach,” says Rick Dell, a senior consultant with Investors Group in Sherwood Park, Alta. However, in life planning you get a better sense of your clients’ expectations, he adds.
Leave the ‘real’ stuff for last
Do not start an interview with a profile questionnaire; rather, leave that for last. Once you are able to “develop a personal relationship with your client you may find that although [portfolio] performance and [investment] returns matter, they are not necessarily the most important aspects of the advisor relationship,” says Malik.
Engage in ongoing client discovery
In life planning, the client discovery process never ends — and it is not always about financial goals, says Olshewski. “And you learn more at each visit or portfolio review session,” says Dell, which is almost like a “family reunion.” The benefit to this is that, you’re never “caught by surprise, you know long before what to expect.”
Never let your clients down
At the end of the day, you earn your clients’ trust in life planning. But there is one caveat: it can be “a double-edged sword” as “you can never let them down,” cautions Dell.
IE