Financial planning is really about… letting clients see what is possible

You cannot plot a course if you have no destination. You have to know where you are going before you can go.

A lot of clients will not know where they are going. A lot of clients will not know that they do not know where they are going.

You have to help them. You have to let them know what is possible.

Examples and case studies work well. Let your clients know what others have done; what worked, and what did not work. Give them success stories and failure stories. Failure is a great learning process, particularly vicarious failure.

Most financial planning strategies require your client to change their behaviour. Many find this hard. The perceived benefits have to outweigh the perceived costs before change can commence, before the new good habits can form. Your client has to want to do it. And the best way you can induce this want is to open your clients’ eyes as to what is possible.

Positive motivation. Success stories.

Sometimes positive motivation won’t work. Something stronger is needed, something more stark and more confronting. Negative motivation. “This is what will happen if you do not change; this is what is probable.”

Negative motivation. Failure stories.

Take care, do not overplay your hand and do not take it too far. But painting a picture of what is probable, and then comparing it to what is possible, works.

Take the example of a fifty-year old couple without much, facing a forced early retirement at say sixty and a life of poverty on the pension. It’s a common presentation. Give examples of late economic bloomers, and what they did to break the mould:

  1. health plans to make sure they can keep working;
  2. re-training and up-skilling to increase workplace longevity;
  3. getting rid of the second car;
  4. completing a costs budget and deleting low priority spends;
  5. working harder, and longer, to stay off the expendable list; and
  6. increasing super.

You have $500,000 now, to last thirty years, and that’s not much. You will need the pension. But if you can keep working another ten years you will have $1,000,000 to last twenty year. That is enough. Your part pension will be a pleasant bonus.

Paint a positive picture using genuine happy client examples. Tell your clients what can be achieved if they create and implement a sound plan, and what will happen if they do not.

The Dover Group