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Avoid Uncomfortable Client Conversations by Focusing on Planning, Not Performance

The COVID-19 pandemic has highlighted the benefits of planning, with the ensuing market volatility easier to put in perspective when both clients and advisors view it through the lens of a set of future goals. 

For years, there has been a shift within the industry toward providing planning, advice-based services. There are a few well-understood reasons for this. 

The model not only allows advisors to build stronger, more resilient businesses but, for better or worse, regulators tend to view it with much less scrutiny. 

Probably the biggest reason, however, is that it best suits the needs of most American investors, including those just starting to save for the future to more sophisticated, higher-net-worth investors and everyone in between. 

The COVID-19 pandemic has only highlighted the benefits of planning, with the ensuing market volatility far easier to put in perspective when both clients and advisors view it through the lens of a set of future goals. 

Still, adding planning services can seem like a challenge for practices that have not delivered this sort of experience in the past.

Change the Mindset

When a client has well-articulated, clearly defined goals, it both reduces their anxiety level and it makes your job less of a roller coaster ride. 

Consider, for instance, a portfolio that was worth $1 million before the current health crisis erupted. It could have taken a 25% dip in the weeks that followed. 

If your value proposition is based solely on performance, the loss of $250,000 over such a short duration—or any time period, for that matter—sets up a profoundly unpleasant conversation, one that could end in the loss of a client relationship. 

Now think about having many conversations like this all at once. That’s mentally, emotionally and even physically exhausting. 

By focusing on goals, however, that same conversation can be much different, focused not on what they’ve lost but whether they are still on track. The near-term result is the same—the portfolio has deteriorated significantly—but their mindset may not be because their long-term goals, with a few slight adjustments, may still be within reach. 

Keep in mind that having a goals-based approach can be just as beneficial when markets are rising steadily because while most clients are happy during those times, some could have portfolios that lag a broader index. 

In those instances, they may want an explanation for why—and by being able to cite previously discussed goals as the foundation for such a conversation, it’s a much easier and straightforward discussion.   

Getting Started

Most everyone, as they get older, is resistant to change. Advisors are no exception. 

But for even mature businesses, it’s not too late to shift gears, with the initial step required to set up the embryonic stages of a planning-based practice simpler than most realize. 

Indeed, it’s as easy as compiling a handful of data points about each one of your clients: age, risk profile, how much money they’ve saved, when they’d like to retire and how much they think they’ll need to do so.

From there, your broker/dealer ought to have tools to allow you to take what you’ve learned and then make some recommendations for clients based on a generic risk profile. 

Your firm should have more comprehensive support as well, including home office specialists that can help with everything from trusts to charitable-giving strategies.   

Taking the Next Step

Adding a financial planner to your practice is the next logical step. If you can attract someone younger, that could set up a succession-planning opportunity (provided you don’t already have one in place), allowing you to kill two birds with one stone. 

Of course, this won’t be cost-effective for many practices, especially in an environment where tight margins are becoming even more compressed. So, the other option is to put in the work to get a Certified Financial Planning designation yourself. 

There is no question that this will require a considerable time investment, with some estimating that it takes about 1,000 hours of study to pass the six-hour test. But don’t let that eye-popping figure intimidate you. 

If you are willing to set aside some time each weekend, it’s possible to get through the entire process in less than six months. At that point, your business will receive an instant credibility spike among high-net-worth investors—many of whom will consider working only with a credentialed advisor. 

Even if a client hasn’t articulated their investment goals, they almost certainly have a list of them, whether it’s to take a vacation each year, to pay for their child’s education or perhaps something more ambitious like to retire at age 50.  

And while none of us relish this period of uncertainty, if you are still clinging to a performance-based approach, use it as motivation to shift your practice to a planning, goals-based model. Not only will your clients be more content, but your business will also be easier to manage. 


Elizabeth “Libet” Anderson is interim president of ProEquities, a Birmingham, Ala.-based broker/dealer.

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