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“Think about the future of the financial services industry… what do you want to see?”
This was the question posed in one of my recent group professional development sessions. One of the attendees, who isn’t a financial advisor but had recently been to see one, piped up.
“I’ll tell you what I don’t want to see,” she began.
This attendee, let’s call her Sarah, went on to describe her recent experience:
Sarah is a business owner who has complex structures in place. Recently, she had met with her financial advisor for a forecasting meeting, and when the time came to assess the projections, the advisor said this: “Sorry, our software can’t cope with structures like yours—so we can only give you the worst case scenario”.
Hearing Sarah recount this experience, I was floored.
Sarah engaged a financial advisor because she was seeking clarity over her finances, but leaving that meeting—her future was looking hazier than ever.
Within our practice, we place a high value on creating clarity. So much so, that it’s become second-nature. A silent force that guides what we do and how we do it.
It’s not necessarily something we actively think about. That is, until we hear a story like Sarah’s.
Since then, the team and I have been thinking a lot about the critical function of clarity in wealth management. Here’s some of the assertions we have arrived at:
It’s impossible to provide your client with a clear view of their current and future situation if you don’t have a comprehensive understanding of their position. How can you show them the big picture, when you’re working with gaps?
We want to know everything about a client before we go to advice. I’m sure that there have been times where our new clients are frustrated purely by the sheer volume of information we ask them for. Thankfully, many of our clients later tell us any skerrick of inconvenience is worth it 100-fold for the truly comprehensive advice that comes as a result.
For example, we don’t only ask our new clients if they have a will—we ask to see the will. We do this because we know how easy it can be for an advisor to completely wreck a client’s estate plans by doing something like changing a binding death nomination in their super—which would divert money away from the estate.
Understanding before advising is the only way to avoid triggering an unintended domino effect.
Over the years, we’ve had many of our new clients tell us that their previous discussions with financial advisors have centred around the performance of their investments. Performance is where the conversation would start and unfortunately, where it would also end.
It’s all well and good to say that an investment had an 8% return for the year, but this information alone means nothing without carefully considering what this means in the context of the client’s life.
An 8% return might be good, bad, or indifferent. It’s an advisor’s responsibility to put meaning to the numbers. Does 8% mean the client is on track to achieving their retirement objectives or their goal to expand their business? Does 8% fall short of the 15% return needed to sufficiently catch up on past underperformance?
Of course, this example is a very minor part of the picture, but it does well to illustrate that context is everything.
An advisor worth their salt will know this and because they have an intimate understanding of your personal situation, they will be able to not just provide the information, but deliver insight.
Sometimes clarity roars. Other times, it whispers.
Sometimes what it looks like for our team to “create clarity” is to begin client meetings by pulling their graph up onto the big screen, and going over it with them. Their graph is a capital chart that shows how far their money is projected to take them, based on various considerations the client and advisor have previously agreed on. It’s an incredibly powerful tool to show them the growing and drawing down of their capital—enabling us to make informed decisions accordingly.
However, sometimes the act of creating clarity for our clients isn’t quite so blatant. When dealing with complex structures that are always in a state of change, complete clarity is not something that can be delivered over the course of one meeting. It’s built over time through continual two-way communication and clarification.
Some of the ways this shows up in our day-to-day client interactions are:
They’re small acts, sure. But over time, these things add up to a shared understanding, a shared vision, and a stronger partnership between ourselves and our clients.
A comprehensive financial advisor shouldn’t lead you through the fog—they should clear it away. If you’re seeking comprehensive financial advice that will cut through the complexity, please get in touch with our wealth management team for a confidential discussion.
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