It’s their life savings we’re managing, this is really serious business.
As a practicing advisor, I am reminded each day that the process of converting a person’s nest egg, their life savings, into a sustainable retirement income is no small matter.
The level of trust required on the part of a family to engage a third-party to guide them and their money is staggering. It should be then, that an advisor makes every effort to equip themselves with the tools required to do the job correctly.
I am a regular reader of some of the great academicians of our field, such as Michael Kitces, Wade Pfau, Moshe Molevsky and others. If you’re not aware of their work, please make it a priority to become aware.
Not only do they provide incredible insights into the body of knowledge of financial and retirement planning (two different things, mind you), but they regularly disagree with one another’s findings. That’s right, they are often citing one another to point out the shortfalls of their respective position. As much as I enjoy this, it should beg the question:
If the academics cannot agree, what am I, the advisor, supposed to do?
I will often read an article on a retirement planning topic, walk into the meeting with a retiring couple, and have the very advice I just read questioned by the client.
If the academics can’t agree with one another on the best solution, and the client won’t agree on the proposed solution, how do you decide what to do next?
Revisit the client’s objectives.
When we consider that the academics are often working in the lab, they are also using models built on logic and reason. But are you always completely logical and reasonable when you make financial decisions? I suspect not. Therefore, the gap that exists between logic and action is where humanness lives. That is, we make the best decisions we can, using the information we have, while being human.
When we as advisors arm ourselves with valuable designations, continuing professional education, and experience, we avail ourselves to the critical knowledge and reason to build logical and reasonable plans. But without the skills to understand and respond to human emotion, we fail to build truly successful plans.
You’ve heard many times that we all make decisions based on emotion and justify them with logic.
Well, the sophisticated and educated advisor bridges the gap by helping people feel emotionally satisfied with logic-based planning strategies. How do we do that?
Here are some suggestions:
- Revisit (often) the client objectives with them. By checking in with them frequently to ask the same objective-based questions a number of different ways, we crystallize their true needs. Once usually isn’t enough.
- Remind yourself often that Lamborghinis get built and purchased not because they’re logical and rational, but because they’re emotional. The same holds true for retirement planning strategies.
- Read the great academics consistently. They are doing great thinking in our discipline without the burdens of running a practice. That means they can take an idea to a very deep level that can expand your thinking beyond your current ceiling of complexity. You’ll naturally provide more logical and reasonable options to your clients as a result.
- Avoid manipulating clients for personal gain. Instead, focus solely on their best outcome and use your skills of persuasion to lead them to feel great about taking their medicine. Just a spoonful of sugar, right? There is a difference between advocating for them and advocating for yourself. Stay on the right side of that equation.
- Draw a lot of pictures for clients. They want to understand the logic behind your recommendations but they simply don’t have your experience and viewpoint. Work outrageously hard to make the complex simpler to grasp. My best methods involve a lot of pictures drawn on dry erase boards. This will allow them to understanding on more than one level. You likely know this but you don’t practice it enough. Your clients will thank you, I promise.
- Build a database of frequently asked questions that you encounter during your client meetings. Then review that list when practicing your presentations. Develop ways to draw pictures and develop stories to address those questions and concerns before they are even brought up. When the client feels that you are in their consciousness, they will ascribe the solutions to you. Since you have been studying the best thinkers in the business, you’ll have the best solutions at your fingertips.
- Consider holding regular and informal education sessions for your clients and their friends at your office. It is a great way to turn the new ideas you have learned into actionable items for your clients to consider in their planning. It will also build incredible relationships based on education, transparency, and a bit of vulnerability. After all, if they know you’re constantly learning new ideas on their behalf, they’ll trust your recommendations on a much deeper level and allow you to make changes in their plans when warranted.
So often, we want yes-or-no and this-or-that choices. Nuance and gray areas make us nervous. When we’re helping people steward a lifetime of savings to navigate a 25 or 35-year period of their life, we have to bring more to the discussion than rules of thumb and simple choices.
We have a mandate to learn constantly and apply our learning to the lives of other people. That’s a very noble calling and a great honor.
When we see it as such, we can more readily place ourselves in the shoes of those whom we serve. Is there a better calling than that?