How To Help Clients Understand Financial Planning

Seth Godin published this material 08 January 2016.

How to teach science

  1. Start with the method. Unlike just about everything else we teach, science is not based on human culture or history. If one wants to study literature or geography or the Kings and Queens of England, it begins with knowing all that came before, the work, the names, the lists, the battles. Science, on the other hand, is above culture. Gravity would have existed even if Isaac Newton hadn’t invented it. After two weeks of science class, students should know how to think like a scientist.
  2. Science makes sense, it’s not magic. One of the challenges of teaching science in high school is that there seems to be so much to cover, it’s tempting to cram all the formulas, names and theories in front of students. Just as there’s no room to argue about when they fought the War of 1812, we often present science as a bag of magical facts, not the result of a method, a method students can implement.
  3. Then the vocabulary. Not first, not second, but third. Vocabulary is where science students tune out. When a word doesn’t mean anything, when it’s a random placeholder, the easiest thing to do is fail to understand it, forever. And then there’s no recovery. A strong vocabulary gives students the foundation to move forward, a weak one is the end, forever.
  4. Metaphors are how we understand. Most of science, even physics after a few months, is about the invisible, the tiny, the very large, the things under the skin. The more we give students metaphors to hook these concepts into a world that’s understood, the better.

Here are some statements worth avoiding:

  1. Memorize this, it will be on the test.
  2. Don’t worry about it, just be able to answer the question.
  3. You understood the concept, but were wrong by a decimal point. Zero credit.
  4. Do the lab, even if it doesn’t make sense.
  5. In my (limited) experience, just about everything we do to teach science is diametrically the opposite of the points listed above.
  6. If it’s worth memorizing, it’s worth even more to understand it.

PS this works with anything scientific, not just school science.

Now go back and substitute “Financial Planning” for science.  Now do you see why clients do not understand it very well.  No one helped them with a good method.  Think about that.

The advisor’s role includes education.  It is worth learning how to do it.  The goal is to make financial information meaningful within the client’s context.

The reward is that a knowledgeable client is a better client.

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.