Does Your Client’s Financial Plan Need a Course Correction?
Reasons for course corrections in your clients’ comprehensive financial plan fall into these three different categories.
Your client’s comprehensive financial plan is never static. Throughout the year, you’ll be presented with circumstances that demand course corrections. In your experience, what situations require a client course correction?
I’ve found that most fall into the following three categories:
- Client circumstances change beyond their control like losing a job, their business going bankrupt unexpectedly, or the death of a spouse.
- Client fails to implement recommendation you give. If your team has listed the action items and recommendations on your written progress report and you’ve clearly explained the need for each, then the client has the responsibility to follow through. Oftentimes they don’t.
- World events change such as significant market drops, estate-planning laws change, or interest rates rise dramatically.
Say your client buys a Harley for $22,000 without discussing it with you. Which category would you place this in? It would be #2 because it’s not been forced on them to do this, and they’re ignoring your recommendation to get the input from your highly skilled team of experts on how to make wise purchases. It was either an impulse purchase or your client has thought about it for a long time but just didn’t communicate this to you.
When new action items and recommendations are needed to correct their financial course, how do you present this to your client? You’d do this immediately if the action is imperative, or if it can wait, you can do it at the regularly scheduled progress meeting.
Before presenting your recommendations, ask your clients what they feel has changed over the last year. Now is the time to really listen, not speak. Document what the clients say and categorize their answers according to the three types of course corrections listed above.
The goal of this conversation is for you to understand how well they understand their situation. You’re probing for any information that helps you make sure your course corrections are on track. There’s always the potential that something your clients say is at odds with your team’s understanding of the situation.
It’s important for a financial advisor to deal with all client concerns whether real or unreal. When you patiently discuss each changed event, you allow your clients to exhaust their thinking. Addressing their concerns will enable them to feel so confident that they’ll be able to sleep at night.
To make sure you’re not missing any necessary course corrections, fully utilize The Trusted Advisor Toolkit™. Then your comprehensive financial firm will function like a Swiss clock. Not a member yet? Register now for a free basic membership.