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How to Navigate Outside Influences Driving Client Planning Decisions

Remind clients that a Google search is no match for your years of ongoing education and hands-on experience.

As a financial advisor, one of the biggest challenges I face when planning with my clients is building their trust in my approach and process. My biggest competition is rarely other financial advisors; rather it’s often the client’s circle of trust. This circle can consist of family, friends and even internet sources they believe are reliable. These well-meaning individuals and other outside influences can sway a client’s planning and wealth accumulation decisions in misguided ways. It’s a financial advisor’s job to navigate these external opinions and build a solid relationship with clients that truly serves their best interests. Here is some advice drawn from my own experiences about how to address this delicate dilemma:

  1. You’ll Never Know if You Don’t Ask

Ask potential clients about their circle at the beginning of the professional relationship. Before diving into the work of building their plan, get to know them and ask whether they have a relative, friend or other trusted source they want involved in the process. It’s best to know from the start if the client will be running your advice by an outsider. I’ve had cases where I spent months putting together a plan only for a family member with no professional experience to come in at the 11th hour and change everything. Engaging with those individuals early—even including them on planning calls—is a good idea.

  1. Meet People Where They Are

My colleagues and I understand the complex explanations and data that support our methods, but throwing these complicated numbers at nonexpert clients may hurt more than help. To build a client’s trust in a financial plan, it’s essential to explain in basic terms that make sense to them. And, in doing so, remind clients that a Google search is no match for your years of ongoing education and hands-on experience.

  1. Leave a Paper Trail

I’ve learned to always follow up any conversations with clients with an email that breaks down everything we discussed. This way, there is a record of our exchanges and a step-by-step explanation of their financial plan. In my practice, I will often add “MEMORIALIZE THIS EMAIL” in the subject line of any recap email that includes salient points to our planning. Adding this line encourages clients to save the email for future reference and ensures the discussed plan is set in stone. Taking this step serves two purposes. The first is the client can have everything in writing and any misunderstandings about the conversation’s takeaways can be avoided. The second is it will serve as a record that your recommendations were suitable and appropriate for compliance reasons.

  1. Memorandum of Understanding

I started implementing a memorandum of understanding as an indication that I stand by the planning concepts and strategy I have presented to clients. The memo outlines the rationale of the plan, the products used to execute the plan, the associated fees, and the maintenance and service model after the plan is implemented. This is important as an “on the record” statement that assures that you’re willing to put your name on your recommendation based on all known facts. This is useful if you know your work is being scrutinized by the client’s circle of trust or another advisor. Only after the client and I both sign off on the memo is account-opening paperwork sent to the client for execution.

Although a client’s circle of trust may think they are offering quality advice, more often than not their opinions are based on their own personal experiences versus sound financial practices or principles. Without the training or credentials to back up their input, they may unknowingly lead clients into poor financial situations that may have been appropriate under other circumstances but may not be appropriate for your client’s unique situation. Understanding the dynamic between a client and their established circle and how to mitigate it is a skill all advisors should possess.

Vidal Peoples is a veteran financial advisor for Strategies for Wealth, specializing in working with medical, legal and other professionals to build their wealth and protect their assets.

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