Sometimes our clients' simplest questions are the ones that we overlook.
Not too long ago I started prepping for an annual meeting with one of our clients. As is the case with most financial planners, our process involved collecting data from various sources so that we would be prepared to discuss not only our annual agenda items but also any questions our client might raise about her overall financial plan.
Our annual meetings are an opportunity for us to discuss with our clients their life changes, re-focus their goals, and address any other external events that might have an impact on their overall plan. So we made sure we were ready to discuss portfolio performance and allocation, even if we didn't intend to spend much of the meeting going over performance. We also made sure to review various benchmarks, mutual fund performance reports, and any other information that might bear on our client's ability to achieve her goals. Suffice it to say, I felt it better to be overprepared than underprepared.
Meeting day arrived, and I was ready. I glided through the agenda items with my client while highlighting the areas that I thought needed addressing. Of course, I showed her colorful pie charts in order to highlight her portfolio's diversification and performance. As I concluded the agenda, I noted that since there were no major life changes, I didn't see a need to alter the portfolio.
I thought our hour-long meeting had gone well — until, that is, my client looked at me and said, "Frank, I just want to know if I'll have enough money to continue living my current lifestyle."
I was floored. All of my prepping for the meeting was to highlight that she was on track and that everything was moving along as we had planned. The problem, however, was that the information was in a language that made the answer to her question obvious to me but not to her. My charts looked pretty to me, but didn't address her question.
I thanked her for her question, and I made a commitment to change how I would address that in future meetings. In other words, I would make sure we discussed her current spending as well as other aspects of her financial life within the context of how her lifestyle might be affected.
After our meeting, I continued to ponder her question, because she was right. My meeting agenda was filled with language and jargon that I understood but not my client.
I reflected on whether we as an industry overcomplicate concepts that can be easily communicated in a way that more directly addresses our clients' basic fears. The answer for me was to question my assumptions about my client communications in general and re-evaluate how I would communicate moving forward with all my clients. I made a commitment to listen more for their fears and address them more directly — free of industry jargon whenever possible. I would not assume my spreadsheets and pie charts said it all. In other words, I would keep it simple.
Frank Paré is a certified financial planner in private practice in Oakland, California. He and his firm, PF Wealth Management Group, specialize in serving professional women in transition. Frank is currently on the board of the Financial Planning Association and was a recipient of the FPA’s 2011 Heart of Financial Planning award.