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3 Steps to a Goals-Based Financial Plan

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As a new financial advisor 27 years ago, I lost a client I thought would be with me for life. I met him while he was mowing his lawn and over our three-year relationship, I’d sold him a number of products that fit his needs. One day, he told me he was leaving to consolidate all his accounts with a financial advisor at another firm.

I was shocked and asked him what I had done wrong. It turned out it was more what I hadn’t done. Unlike the other financial advisor, I hadn’t taken the time to fully understand his needs and his goals. It was a watershed moment for me. I realized I was not in the business of selling products. My job was to understand my clients’ goals and create a plan to help them to meet those goals.

Cultivating great human relationships around goals-based advice is critical to attracting and retaining clients. The financial crisis demonstrated the effectiveness of this approach. Clients who had developed a goals-based plan with their financial advisor stayed loyal. They saw the market turmoil as a bump in the road and part of a larger journey.

Goals-based advice creates the foundation for a deep relationship and changes the dynamic from beating a benchmark to achieving the clients’ objectives. It establishes a human-centered framework for long-term success and helps clients stay the course during volatile times. It also differentiates the financial advisor’s advice and solutions — the right mix of empathy and knowledge in helping them accomplish their goals.

Consistent, quality investment performance is a baseline expectation for clients. When clients see the value they’re receiving as more than investment performance, they’re more likely to separate the value of the relationship from investment returns.

Build an Enduring Relationship

According to J.D. Power, 38% of investors said their advisor developed a documented plan that incorporated risk tolerance and provided reasons for investment performance. Right now, there is a clear opportunity for financial advisors to differentiate in this area.

So how can financial advisors incorporate goals-based advice into their practices? Consider this three-stage journey: 1) understand the clients’ goals, 2) co-develop a long-term strategy and 3) stay connected and adjust goals as needed. J.D. Power’s research indicates that financial advisors who provide goals-based advice are more likely to see significantly higher client satisfaction and higher levels of new assets.

1. Understand the Client’s Goals

The initial stage of the process is hugely important. An initial “discovery” session helps the financial advisor uncover pertinent details, see the client from a holistic perspective and help them define their most important goals. Clients often articulate a problem they want solved.

Savvy financial advisors will focus on immediate needs and look for workable solutions, but also take the time to look deeper. Rolling over a 401(k) might be the issue on the table, but what about protecting retirement savings with insurance or saving for a child’s college education? There is a deep need to combine IQ with EQ to truly understand the dynamics at play.

Once goals have been set, document them for your reference and the client’s. This allows financial advisors and clients to regularly assess if they’re on track and reduce anxiety. This changes the dynamic of the relationship, from short-term performance of their assets to the importance of staying on track to fulfilling that goal.

2. Co-Develop a Long-Term Strategy

Clients want to feel understood, informed, in control and secure. What better way than making them a true partner in co-developing their long-term strategy? When we take time to understand what’s important to clients and their families before partnering with them, we can  develop a personalized strategy and offer tailored solutions that help them build, grow, protect and distribute wealth.

This starts with the right mix of investments that will have the desired outcome over the short and long term and a consideration of trade-offs to get there. For example, a client may want to retire at 65 and also have a vacation home. In this case, the financial advisor could present the client with several scenarios, one that includes extending their time horizon and working a few additional years or saving more in order to retire comfortably and still afford their beach retreat.

Another essential component of a long-term strategy is a client’s risk tolerance. While each client’s tolerance has to be respected and accommodated, there may be scenarios where it’s necessary to nudge them gently out of their comfort zone by demonstrating how to prudently, but realistically, balance safety and risk to achieve their goals.

Working with clients to find the right level of risk strengthens trust. Clients also gain a better appreciation for the planning process when they understand how risk is measured and how it impacts their goals. Being comfortable with the process and the plan can help clients manage their emotions when making investment decisions.

3. Stay Connected and Adjust Goals as Needed

While goals-based advice is a long-term approach, we know life changes and often in unexpected ways. That’s why it’s crucial to stay in regular communication with clients, creating a long-term partnership to continue discovering and confirming what’s most important and what may have changed over time. It’s essential to partner with clients throughout their lives to provide them with choices, help them stay invested and keep them on track.

To make these ongoing discussions more productive, have a consistent and repeatable process for reviewing any life changes, revisiting goals, investment strategy and risk tolerance.

Technology can help make clients active participants. A simple but effective strategy is dual computer monitors; this helps facilitate a discussion because the advisor and client have the same information at their fingertips. A digital application, which can be easily accessible from anywhere at any time, provides clients reliable and accurate goals tracking. It can also enable the collection of information maximizing client and advisor in-person time and deepening human relationships.

Finally, if portfolio and risk adjustments are needed, being transparent can help win hearts and minds. It gives clients an opportunity to share any concerns and helps them remain disciplined during periods of volatility. The driving force behind any changes to a client’s portfolio should be their objectives, while also acknowledging the impact on goals performance.

If I’d Known Then What I Know Now

Looking back, I can see how these stages would have made all the difference with my early client. I would have thought like him, not just about him. I would have asked better questions, listened with a servant’s heart and helped guide him and his family into the future. In short, I would have provided goals-based advice and put strategies in place to deliver advice in a smart, consistent way for a better client experience. In an era of heightened expectations and changing regulation, goals-based advice is a great way to put clients first, every time.


Ken CellaKen Cella is a principal leading the Client Strategies Group for Edward Jones, which includes the firm’s Marketing, Products, Research and Trading and Solutions areas. Cella began his Edward Jones career in 1990 and served as a financial advisor in O’Fallon, Missouri.