Those of you who bear the CFP moniker or are NAPFA members are committed to the fiduciary standard of acting truly in your clients’ best interests. In the spirit of Kevin Condon’s Sacred Cow series, many in the financial planning profession believe in the Life Planning Sacred Cow—every client needs life planning. Do you believe that if you fail to do “life planning” with a client you have failed in your fiduciary responsibility to your client?
Short digression: for those of you new to George Kinder’s work (Seven Stages of Money Maturity), let me provide a bit of background. Life planning is grounded in helping clients clarify their values by grappling with three questions:
Question 1: Imagine that you have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything?
Question 2: Imagine that your doctor says you have only five to ten years to live. You won’t feel sick, but you’ll never know when death will come. What will you do? Will you change your life? How?
Question 3: Now imagine that your doctor says you have only one day left to live. Ask yourself: What did I miss? What did I not get to be or do?
Exploring these questions seems like a very sensible way to identify your clients’ deepest concerns. Shouldn’t those questions be automatically included as part of your step 1—establishing and defining your relationship with the client?
Let’s explore why this approach to life planning is a bad idea.
How “warm and fuzzy” will your clients feel when you start out by talking about how they’re going cope with death? Most clients will likely fidget, look at their watch and figure out how to change the subject or head for the door. They just don’t want to go there.
Consider this: clients infer different things from terms like “high risk tolerance” even if you explain the potential gains and losses. For example, Aunt Mary’s “high risk tolerance” –because she’s 85—may mean choosing municipal bonds rather than annuities. For her 30-year-old Silicon Valley developer multi-millionaire son, special situations or hedge funds are more appropriate “high risk” vehicles.
So what’s the point? That little word, “every.” When an advisor uses the word “every,” he turns himself into a hammer and every client into a nail. He’s setting himself up for relational failure with a client. Why? He’s driving his own agenda, not his clients’.
This Sacred Cow is a lot bigger than just “life planning.” The Sacred Cow is the dangerous mindset that whatever “hot” tool or mindset is de rigueur, we believe it must be systematically deployed across that part our client base for whom it is “appropriate.”
What if, instead of driving our own agenda, we focused on listening to, discovering and championing our client’s agenda?
This shift, incidentally, applies to any of us who do marketing or sales of any kind.
Thanks to Rick Kagawa, CFP, for inspiring this blog.
Toolkit
Ask yourself: What triggers my “every client must” mindset?
