How lifestyle planning for clients can boost your practice

Where this niche differs from traditional financial planning practice, however, is that the first order of business is to impose order on a client’s cash flow. Financial vehicles such as investments or insurance products can be dealt with more effectively once that is accomplished.

“Lifestyle planning is the part of financial planning that is about the person and the life that they are trying to achieve now — and in the future,” says Holmes-Winton.

In order to become an effective lifestyle planner, Holmes-Winton offers the following tips:

1. Understand how debt and cash flow works

Without a solid understanding of debt and cash flow you cannot be an effective lifestyle planner, says Holmes-Winton.

Given that these areas are “core” principles when it comes to lifestyle financial planning, she suggests you take some time and deepen your understanding of these subjects. “An advisor should not be able to give financial advice if they don’t have specialized training on debt and cash flow because [these areas] have a huge influence on all the other stuff an advisor manages,” she says.

You may wish to enroll in a formal education program or conduct your own research using the wide range of materials that is available on these topics.

2. Listen to your clients’ goals

It’s crucial to listen carefully to your clients’ “wants” versus their “needs” at an early stage in the planning process. That should help you develop a good understanding of what they hope to accomplish in their lives.

In order to get a truly full understanding of your client’s goals, you might have to do some gentle drilling. For example, ask them some “bigger picture” questions, such as: “If money were no object, what would you be doing with your life?” Or, “why aren’t you doing that now?” These can help launch you into an engaging conversation with your client.

Says Holmes-Winton: “Most financial plans are not built around ‘how can [the client] work three or four days per week instead of five’ – or, ‘how can one plan to take an entire summer off.’ Lifestyle planning can help you answer those questions for your clients.”

3. Understand what drives behaviour

Typically, the training and practice of financial planning is heavily influenced by principles founded in mathematics and law.

While these are essential, they do not usually address the types of behaviours that drive the financial choices made by individuals. But behaviour has a huge impact on how clients invest their money – whether consciously or unconsciously, says Holmes-Winton.

By getting a better understanding of human behaviour, you will be better equipped to work with clients who come to you while dealing with a crisis — for example, realizing they have purchased an expensive sports car that they can’t afford as the result of a mid-life crisis.

“At the end of the day, it seems that the understanding of behaviour and knowing exactly what your clients want from life is what seems to be missing,” Holmes-Winton says. “It’s an area that [planners] can take advantage of.”

4. Helping clients develop good habits

Having a good understanding of human behaviour will also help you impart good financial lifestyle habits to your clients.

While you can control your client’s investments and insurance, you have exponentially less control over their day-to-day cash flow.

Taking some time to develop a money management system with your clients, such as a budget or controlling credit card spending, can pay dividends over the long term: for instance, clients may be better able to contribute to their RRSP when they have their cash flow under control.

“Most clients are walking around not knowing how much money they can spend on their next purchase. Lifestyle planning can help them get the best results out of the money they have,” says Holmes-Winton.