Putting hours of work and energy into creating a financial plan that is ultimately ignored by your client is a frustrating experience for any advisor.
“I’ve been through this many times,” says Al Nagy, regional director with Investors Group Inc. in Edmonton.” And over the years I’ve had to adjust my practice to find ways around it.”
Here are some techniques you can use to encourage your clients to stick to the plan:
> Make it personal
A financial plan starts with a goal. If a client is faltering, you must return to the original goal.
Says Jim Kraft, vice-president of wealth planning services with BMO Financial Group in Toronto: “I find something in our engagement that’s important and trade it off.”
For many clients, saving for a child’s post-secondary education can be a good motivator. Remind your clients that following a plan now means less financial stress when their children are ready for university or college.
For high net-worth clients (who may be less concerned about the affordability of education or retirement), think about what matters to them. Do they want to ensure a stress-free estate transfer or set up a philanthropic gift?
Make sure these goals are built into the plan so you can use them to help keep your clients on track.
> Get interactive
Engage clients by letting them see the plan instead of you just reading it. If possible, display the plan on a large screen so you can look at it together.
Nagy uses his software to colour-code graphs using green, yellow and red indicators. Through the traffic-light symbolism, his clients can see where they are ahead in meeting their goals, and where there is a shortfall.
“Rather than just throw out a bunch of numbers and show them negatives,” Nagy says, “you can show them what the reality is.
“What’s better,” he continues, “showing them a negative number or a red flag?”
When Nagy’s clients see red flags, he says, they know to ask questions.
> Ask why
If clients are not following the plan, be ready to ask why. If their original objective is not enough to keep them motivated, maybe it should be reviewed. A true goal will be enough to persuade clients to follow their plan.
“Why do they do this? What goals do they have?” Kraft asks. “Are these the goals that make them wake up in the morning and get going on the day?”
> Present the alternatives
Show your clients the potential results of not following the plan.
“Every time you go back to the plan,” Nagy says, “you need to show your clients the difference between what they can be doing, what’s achievable and what they are doing.”
Show your clients the progress of their financial plans through regular reviews, which can be encouraging.
This is the second installment in a two-part series on motivating clients to develop and stick to a financial plan.
For part one, see: Motivating clients to develop a plan