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Financial Planning > Tax Planning

Is Your Client a ‘How’ or a ‘Why’?

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As advisors, we come across nearly the entire spectrum of personality types. Despite variances in backgrounds and behaviors, I’ve found that every client generally fits into one of two categories: the “how” types (hows) and the “why” types (whys).

The hows are fixated on the construction and execution of a plan, but often lose sight of their ultimate financial goals. The whys, on the other hand, can effortlessly visualize where they want to be but struggle to find the discipline to get there. With that said, the first step in revealing both sides of a client is helping them identify their natural tendencies.

As the financial advisor, I usually clue into which category describes each client during our first encounter. At that point, I work to activate the complementary perspective because they typically won’t activate it on their own.

For the hows, I’ll ask them to visualize their desired retirement lifestyle. Research has established the potent impact of visualization for athletes, and it’s my job to coach my clients to do the same. Even golfing legend Jack Nicklaus once said, “I never hit a shot, not even in practice, without a very sharp in-focus picture of it in my head.”

For the whys, I’ll dig into their specific goals to compel them to put substance behind their vision. Regardless of their natural way of thinking, I encourage them to start with their vision and values and let the details follow.

It’s important to understand that clients are never entirely hows or whys. They all have a natural leaning, or preference, but it’s never a total bias.

For many, it is a slight preference. Others have a distinct dominance. With that said, whenever I talk about hows and whys I’m actually referring to whichever one represents their usual way of thinking.

The hows tend to be very logical, disciplined and organized. A tongue-in-cheek article from Business Insider points out that they are also easy to irritate. They often excel at carrying out a financial plan because they are adept at prioritizing tasks and seeing them through. On the downside, hows can be so task-oriented that they don’t fully grasp why they’re performing each action. For example, a person could be so committed to minimizing taxes that they actually hurt their after-tax returns in doing so. These people need to occasionally step back and ask themselves “why am I doing this?”

It reminds me of the famous line from the Cheshire Cat in Alice in Wonderland: “If you don’t know where you’re going, any road’ll take you there.”

The whys are often creative, intuitive and spontaneous. They are able to visualize what they want in life, which is an incredibly beneficial ability when constructing a financial plan. That ability will often keep them motivated, as they can better imagine their desired goals.

Mihaly Csikszentmihalyi, a Claremont Graduate University professor of psychology noted for his work in the study of happiness and creativity, concludes, “Creative people tend to be smart yet naive at the same time.”

The challenge for advisors is to harness that creative energy and focus it toward the steps required to reach their goals. Ideas and dreams are wonderful, but whys can have trouble bringing them down to reality. Their ideas go nowhere without the discipline to accomplish them. It can create a frustrating scenario when a person knows what they want but doesn’t know how to get there.

It’s quite common to find couples where one is a how and the other is a why. Usually one of the two will naturally take charge of the nuts and bolts of the finances, while the other is focused on the vision of where they want to go in life.

It creates an ideal situation for me as the advisor, because at that point it’s just a matter of getting them to agree. Once they’ve bought into the why’s vision, modified of course by the financial realities recognized by the how, they have a head start toward pursuing their goals and dreams.

Not every advisor is capable of revealing both sides to their clients. If, for example, an advisor only looks at things from a numbers point of view, then they likely have a very dominant how perspective.  On the other hand, if they sometimes struggle to help clients connect the dots between where they are and where they want to be, the advisor is likely a why type. While either situation could create synergy if the client is the opposite type, it can run afoul if it creates an imbalance in the dynamics of the financial plan. For most clients, it’s very important that they get balanced views from their advisors.

The more clients know about themselves, the more they can integrate all of themselves. By helping them establish the how and why of their financial plan, an advisor puts them in a better position to reach their true goals.


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