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Many an amiable financial advisor is quick to boast: “I’m a people person.” But in crafting financial plans, how many FAs take that cordiality a giant step further to understand on a deep level just where clients are coming from and where they want to go?

Seeing clients as more than mere numbers — assets, brokerage statements, tax returns — is what financial life planning, also known as holistic planning and life planning, among other tags, is all about.

With clients hungry for advice in light of the longevity revolution, global meltdown and Great Recession, the time for this sweeping financial-planning process has indeed arrived.

“People today don’t want to be sold XYZ product. They want a customized, personalized financial plan for life,” says Mitch Anthony, founder of the Financial Life Planning Institute ( and who, in his book, Your Clients for Life: The Definitive Guide to Becoming a Successful Financial Planner (Kaplan Business, 2002), introduced the financial life planning concept, melding financial planning with attitudes and experiences about money throughout the client’s life.

Anthony shockingly discovered the link between money decisions and quality of life in the 1980s running Midwest suicide-prevention centers. “Farmers who had lost their farms were stringing up nooses in the barn. I found out it was a poor financial decision that led them to that point,” Anthony recalls.

By 2000, he’d started the firm, Money Quotient, to train advisors in financial life planning. Since 2002, when he founded the Institute, MQ has been helmed by his former partner in the first venture, Carol Anderson.

Anthony, whose client list includes LPL Financial and Investors Group, describes the Institute as “a discovery laboratory” continually hatching new methods to learn about people’s relationships with money. One recent innovation is scalable technology pegged to 66 life transitions — from birth of a baby to a death in the family. Using client input, the Institute generates customized reports for FAs’ use in creating financial strategies that meet clients’ specified life transitions.

“A large firm can customize this technology and give 10,000 or 15,000 advisors access to it at one time,” says Anthony, who has a deal in the works with a major bank.

It is critical to bear in mind that the life planning approach simply won’t work unless the advisor is adept at eliciting from clients their financial attitudes and experiences, along with future lifestyle needs and goals.

Armed with exercises from trainers like Anthony and The Kinder Institute of Life Planning, whose founder, George Kinder, wrote The Seven Stages of Money Maturity (Dell, 2000), advisors can learn to be potent questioners en route to constructing three-dimensional client portraits.

“Planners need very desperately to understand the client. Life planning is that bridge,” says Michael F. Kay, president of Financial Focus, based in Livingston, N.J. The RIA, who converted to a life planning practice four years ago, is author of The Business of Life: An ‘Inside-Out’ Approach to Building a More Successful Financial Planning Practice (Advisor Press, 2010).

Kay continues. “By digging deep enough to get people to open up and talk about what they really want, you’re dealing with their life, not just how much money they can accumulate but all the components of financial planning.”

Though requiring an above-average dose of handholding, time-intensive financial life planning’s biggest plus for FAs is client retention — still a huge issue following the financial crisis that prompted countless clients to switch FAs.

“Advisors,” says Anthony, “will have much greater retention of clients because understanding the client well — their needs, not just their goals — is one key to that.” Further, “clients are inclined to bring more money to the table once they know that the advisor ‘gets’ them — what they’re all about — and not just trying to sell them the latest hot fund.”

Advisor Training is Key

Asking the right questions the right way is pivotal to obtaining the all-important client information required for the life planning process.

“Today’s business model places the emphasis on a) how good an inquirer and listener you are and b) how good you are at integrating what you hear into a financial strategy,” says Anthony.

His distinct process focuses on probing clients about money related to four critical life areas: history, transitions, principles/philosophy and goals.

A good deal of training in financial life planning zeroes in on developing empathy and honing listening skills so as to first, connect, then create a dialogue with clients.

“It’s actively listening to what the client is saying, not thinking about what you should say next,” Kay notes. “It’s looking for non-verbal [clues] too. If someone is sitting with their arms and legs crossed, you know you’re probably not going to get a very open answer.”

Advisors who aren’t trained in a structured process run the risk of posing questions that make clients clam up. “If they just poke around or are too pushy, there’s a danger of totally turning them off,” notes Kay.

The Kinder Institute’s goal-oriented process probes deeply with questions such as: If you had only five to 10 years to live, would you change your life? If so, how?

Anthony considers such queries psychotherapist territory and inappropriate for FAs to put forward.

“I place emphasis on how advisors need to expand their competencies in the art of dialogue and integrating the plan they come up with into the life of the client,” Anthony says. “I don’t think we need to turn advisors into therapists. The FA should become a facilitator of dialogue, not a psychologist who’s going to read into clients’ issues.”

Likewise, Kay writes that, rather than act as therapists, advisors should be “financial diagnosticians prescribing actions that we hope will bring clients close to living their dreams.”

Kay has on occasion asked profound psychological questions but warns (in this interview) that “for some people, it’s too invasive right off the bat. They’ll go into a shutdown because you’re asking them to lay themselves bare. If the client isn’t ready to go that deep that quickly, it will scare them away.”

At Wells Fargo Advisors, Michael Wincek, senior vice president-investment officer, based in Omaha, Neb., uses the firm’s Envision process to obtain an in-depth understanding of clients. “It’s a very stringent interview process. It may not seem like that to the client because it’s relaxed and folksy; but at the end of the day, there’s a lot of very important information gathered,” he says. “It helps us understand the client’s needs and hopes, and lets me offer an advice model to help optimize their lives. The assets are simply the tools.”

One client-friendly exercise Wincek uses is a set of cards — variously titled “Retirement Income, “Retirement Age,” “Education Goals,” “Dreams, “ etc., which he places on the table. Clients are asked to arrange them in priority order.

“That tells me, for instance, that if retirement income is a real hot-button issue but retirement age isn’t, I can keep the client working longer for a higher income goal,” he says. “It allows us to discuss these issues and show how the client can make trade-offs.”

Envision has a Monte Carlo computer simulation component that, based on client inputs, produces hundreds of goal-centric scenarios. But, Wincek stresses, the critical part is gathering and editing the information. “If you don’t know the client as intimately as possible, you won’t get anything worthwhile. The rest is just turning out a computer program that crunches data.”

Life Transitions Outweigh Goals

Anthony insists that, though client goals are obviously important, a discussion of transitions should come first.

“Goals are what you want to happen; transitions are what are going to happen anyway. What’s the point of talking about building a home in Bermuda if the client has a mess [of financial trouble] in front of them?”

One of Anthony’s newest exercises is the “Fiscalosophy Assessment,” intended to help clients articulate their philosophy about money issues.

Another is the “Financial Diagnostic Self-Assessment and Workbook” with 40 statements to be ranked according to clients’ education about money matters and how they manage their money emotions. The Institute uses this input, Anthony explains, to produce advisor reports to show clients: “Here are the areas we need to work on in order for you to build wealth in your life.”

Like Anthony, Kay considers money history highly significant. “If you don’t understand a client’s money biography — behaviors they have around money stemming from the past — how can you give truly good advice? If someone grew up believing that [love of] money was the root of all evil,” he says, “what are the chances they’ll be a good saver?”

Kay recently began using a “Family Flow Chart,” showing family members’ ages against their physical and financial health. “If, say, we find a situation where there’s contention among siblings, we need to make sure the estate planning is set up in a way that won’t be problematic,” he says.
Not surprisingly, one aspect of financial life planning that’s proven sticky is assessing risk tolerance based on client responses.

“It’s a big can of worms,” Anthony says, “and we’re working on it right now. The idea that you’re going to be pegged according to three words — aggressive, moderate or conservative — is idiotic. Anyhow, people have no idea what their risk tolerance is.”

He continues. “The real context for risk tolerance is: What do you need the money for? If you need it to take care of an aging parent, for instance, how much risk can you take with it?”

One of Wincek’s Envision cards is titled “Risk Tolerance.” Clients might take a while to shuffle that one. “It’s an exceptionally thorny issue,” he says.

“So if they tell me they can’t take risk at all, then we’re going to be very, very cautious in how we construct a portfolio. If they come in with a somewhat cavalier attitude, we’ll take it back a notch to ‘moderate.’”

When too-lofty retirement dreams fail to mesh with projected investment returns, life planning advisors must be forthright.

“Then it’s time to quit being a salesman and start giving people reality checks,” says Anthony. “You have to say, ‘The numbers don’t match up. Are you willing to compromise your lifestyle spending right now? Or are you willing to compromise on your goals?’”

For Wincek’s part, not only has life planning changed his clients’ lives but it has improved his own. “I’m not working at the frenetic pace of having to sell, sell, sell to meet my numbers. We’re selling advice on life and portfolio issues. If you think you’re going to be a trader and stay in this business, you’re not. You’d better develop relationships with your clients.”

That makes sense because clients today are surely in need of expert advice. In his discovery laboratory, Anthony is busy developing tools to help advisors “flesh out the issues that are keeping clients from building wealth the way they could.

“People,” he notes, “still do stupid things with their money.”

(Photo by Joe Treleven/Treleven Photography)