The world of financial planning today is vast and complex. There are an infinite number of strategies and theories on how to achieve financial goals, and an equal number of products to help clients get there. Advisors spend countless hours keeping up to date on market trends and new products. The seemingly limitless number of options makes putting together a financial plan a very complex process.
That however starkly contrasts to the needs of your clients. They usually walk in your door having only a few very simple questions. Am I going to be able to retire comfortably? Can I afford to send my child to college? Will my spouse be OK financially if something were to happen to me?
This gap between the overwhelming complexity of the financial landscape and the simple needs of your clients is where you as an advisor can shine. You can use your knowledge and experience to weed out unimportant information and unsuitable products for your clients. Take complex strategies and find ways to explain them so that your clients understand. In essence, be a filter that turns complexity into simplicity.
Discovering What Matters to Your Clients
To be an effective filter, advisors must do two things. First, they must choose what information gets through the filter. Determining the “what” comes down to matching the knowledge of the options available in the market to the needs of a particular client. In order to do that, you first have to have a good idea of what those simple questions are that your clients have. What is their most important financial goal? What keeps them up at night? Experience also plays a key role here when selecting strategies or products in order to make sure that they are suitable for your client.
Filtering Out the Noise
After the “what” is determined, the second task is to figure out how to pass those options on to your clients. This is often where advisors miss the mark. Even though you may only be presenting a handful of options to your client, if you simply regurgitate a prospectus or throw pages of numbers their way, they’re bound to end up looking like a deer in headlights. Instead, the next time you go to explain a new product or strategy to your clients, consider one of my favorite quotes on simplicity from Albert Einstein – “If you can’t explain it to a six year old, you don’t understand it yourself”.
Now, I’m guessing that not too many of your clients are 6 year olds, but this is still a great concept to keep in mind. Specifically:
Have you simplified your proposed strategy down to its essence, to the point where you could explain it to a 6 year old if you needed to?
Have you removed the superfluous details so that the essential ones stand out?
Have you framed the strategy in terms that your clients will understand?
Discussing the strategy in terms that your clients can relate to often has a significant impact because it stimulates an emotional response. For example, I saw a quote recently that suggested the easiest way to teach your kids about taxes is to eat 30% of their ice cream. It doesn’t get much simpler than that. And I’m pretty sure that if you’re that kid, you’re going to have an emotional response!
Simplicity & Trust: The Basis for Any Good Financial Plan
At the end of the day, the goal of any good advisor is to build trust between themselves and their clients. Some advisors may feel that presenting a complex plan to their clients is a good thing because it makes it appear that they’ve done a lot of work and therefore justifies the fees and commissions that the client is paying to them. But as the quote from Leonardo da Vinci in the title of this article suggests, creating a simple and understandable plan may actually be the more difficult task. By putting the effort into simplifying the process of financial planning for your clients you will build up their confidence not only in the plan you present, but their confidence in you as an advisor and ultimately their confidence in entire process of financial planning.
With NaviPlan, we have kept the goal of simplicity in mind when designing our Next-Generation reports. They are specifically aimed at providing you with engaging content that is simple and effective at answering the questions that your clients have. Take a look at our 40+ new reports in the latest NaviPlan release and see how those reports can help you deliver on that simplicity. Now, I’m off to the ice cream parlor to see if I can find someone who wants to learn about taxes.
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