What’s the most important question you can ask clients?

[ January 15, 2013 ]

Financial planning is not necessarily about financial products, and Terry McMaster says there are more important questions to ask clients

Since when was financial planning about financial products?

I recall a meeting with Steve some years ago. Steve was a 40-something surgeon whose oldest son was about to play his first game of under nines basketball. Steve lamented that he would probably never see him play a game: they were scheduled for just after school each Thursday, so how could he get ever get there?

Steve needed some serious reframing. What is really important? What is the purpose of work? What is the purpose of wealth? Time is too short to tell the full story so, in summary, Steve experienced his work-life-balance epiphany, got out his big red pen and booked his son into his diary, and his life, from that Thursday afternoon on. Steve never misses a game. Even better, he is now the coach, firmly locked into his growing son’s memory bank and the envy of every mother at the game.

I see Steve twice a year and he always reminds me of our first meeting, and proudly displays the latest team photo. He values the advice. It was worth more than money. And it showed I was on his team and was putting his interests first. I expect to one day be his son’s adviser too. I feel great because I have made a real difference to two lives.

Financial products are just a small part of what a financial planner does. Clients want to know how they are going. Clients want to know if they can do it better. Clients want to know if they are doing something wrong – in life, not just in finance.

Obviously your input has a financial orientation: financial planners are not psychologists. But financial advice should be leavened with life experience and common sense. I don’t believe a 35-year-old plumber client with a growing family is obsessed with superannuation retirement options, TRISSs and ETPs. I do believe he wants more family time, to save tax, to increase his income, to pay for the new bedroom, to upgrade the car and to get the family away to Surfers Paradise for two weeks at Christmas.

The pressure can be overwhelming. Your client needs someone with grey hair and life experience to guide him on his way. He is concerned about the here and now of today, not the then and if of a retirement half a lifetime away.

So, your role is to coach him, to show him how to achieve his life goals and make a better life for his family. Encourage your client to start his own business, to create and execute a great business plan to increase and diversify income, to install better tax planning, to make the new car more tax efficient, to grow the business with deductible debt and to manage cash flow to pay off the non-deductible home loan as fast as possible.

It’s easier to take time off if you know your business is doing well. Keep your client away from traps: make sure he has a good accountant and keeps his records impeccably. Make sure he does not have too much insurance, but is covered nicely if tragedy strikes. Encourage him into a SMSF, and use debt to buy a factory to grow the business even more. Make sure everything is as cost-efficient as possible, and control as many risks as possible.

Meet regularly to review progress. The most important question is “Are you happy?” Make sure your clients never miss a basketball game.

The Dover Group