There are three reasons why I start every new client relationship with this question.
1. Peace of mind for clients
Since every person has a unique perspective on money, it can be an extremely emotional topic to discuss openly. Additionally, regardless of one's income or asset level, there is generally something about money that clients have questions about or that concerns them. By focusing on these items, I can provide a client peace of mind as they know their specific "pain point" has been addressed right from the start.
The COVID-19 pandemic has created a high level of economic uncertainty and has become a major concern for many people. In our current economic environment, financial planners will most likely have to address the impact of this health crisis on each client's financial situation.
I'll illustrate with an example. Bob and Maria are married and co-owners of a local restaurant, which has been operating successfully over the last 15 years. Unfortunately, their operating income has declined significantly over the past few months due to the coronavirus outbreak.
Bob and Maria hire Jane, who is a Certified Financial Planner professional. Jane asks them about their money concerns first. Bob and Maria clearly indicate that maintaining sufficient emergency cash reserves and understanding how the CARES Act can help small businesses are their top items to address. Jane completes a monthly spending audit for the couple and also prepares a summary report about financial assistance available to them through the CARES Act.
2. Establishes that the client is No. 1
Saying that the client is No. 1 in the relationship sounds great and can be a catchy sales phrase, but actually doing it requires intention by the financial planner. Addressing client concerns immediately will demonstrate early on that the client is being prioritized first.
At the start of a new client relationship and after reviewing their financial information, a financial planner will (and should) find different planning opportunities to discuss. These observations are extremely important as this advice definitely needs to be communicated in a timely manner and are why a client is hiring a planner in the first place.
However, if the client is truly No. 1, then a financial planner should move forward at a client's pace, not their own. Consider the following example. Mike and Jennifer are married with two children (ages 7 and 4). After interviewing several financial planners in their area, they decide to hire Mark and provide him the appropriate financial information.
After his full review, one of the items that Mark notes is Mike and Jennifer increasing their tax diversification of retirement assets. However, the couple clearly stated that since a third child is a possibility, they are looking to purchase a larger home within the next few months and seek financial advice on this transaction.
Mark's observation about Mike and Jennifer's retirement assets is very important and needs to be addressed, but his attention now has to be focused on providing value to the couple for their upcoming real estate transaction. He completes an analysis for the couple that includes cost to own/maintain a new home, ability to save for other goals (after home purchase), and a review of home insurance policy .
3. Increases a client's level of confidence in financial planner
One of the many responsibilities of a financial planner is instilling confidence in clients with regard to their specific money situations. Throughout the relationship, a client wants to be confident that their planner is knowledgeable and will continue to provide valuable financial advice.
To achieve this level of continued trust from a client, a planner has to earn it. If a client comes with a pressing concern and the financial planner immediately provides value with solutions, then this action can go a long way with trust building.
Let's revisit the previous example of Bob and Maria. COVID-19 has greatly challenged our economy, especially small business owners like Bob and Maria. They were very stressed about their money situation, but now have a sense of confidence because of Jane's diligent research of the CARES Act and review of their emergency cash reserves. Bob and Maria now have a high level of confidence in Jane's ability. They believe that since she listened to their concerns attentively and took care of them when times were difficult, Jane is someone they can count on going forward.
Martin A. Scott, CFP, is the founder and financial planner of Lasting Wealth Principles , a fee-only comprehensive financial planning firm.
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