moneyFYI
Financial Freedom Is Merely Organized Common Sense
Good Questions Matter Most
The ideal client – advisor relationship
In a good relationship each side contributes to achieve a goal. The contributions from clients and advisors in a financial planning relationship are taken for granted and the result is often an ineffective plan.
What should be the allocation of duties
Let’s first notice the ideal and then move from there. Consider a Henry Ford maxim. “We should choose the pilot of the plane from the group of people who know how.”
So we should organize tasks and duties along the lines of who knows what.
Do clients know tactics?
They have basic ideas about investing, risk management and insurance, tax management, and the arithmetic to calculate targets. Few, more likely none, have a complete awareness. None spend any material time keeping up to date.
Tactics should not be part of their duties.
Do clients know logistics.
Some think they can do their own will and powers of attorney. Again few do. Self help books, the internet, and do it yourself Cd’s don’t often work.
Could any do a trust agreement or incorporate themselves? No.
Could any defend their investment portfolio in terms of what it is supposed to do and the methods selected? Not many.
Do any fully understand the nuances of life and disability insurance? Again no.
Clients should delegate tactics and logistics.
Do clients know strategy?
Yes they do. In fact they are the only ones who do. Advisors are in the wrong lane if they are setting strategy.
Clients must decide their purpose because no one else can. Only they know what they want. They know it without detail but with emotional content and thus motivation.
Only the client knows what they are willing to do and not do to achieve their goals.
No advisor has any business deciding strategy. Their very limited role is to help the client identify voids in their plan and to show them where conflicts exist.
Examples of a strategy conflict
I had a client who was about 35 and wanted nothing whatever to do with retirement planning. No tactical calculation of the need carried any weight.
Question. You are a smart guy who, from my viewing point, is behaving irrationally. What do you know that I don’t?
Answer. In the last three generations of my family, no male has lived to be 55.
Now conventional tactical approaches make less sense.
Nonetheless, he was willing to adopt a game theorist approach so that if he did live longer he would still be okay. Not perfect but okay. At 53, he began to invest much more aggressively. Medicine advances. He died recently at 82.
As an advisor ask more questions and have few answers until you know the client’s answers.
Overview
- Clients mistrust advisors who promote answers to no known question.
- Client’s must discover that in most tactical areas their knowledge is incoherent and does not address more than a tiny fraction of the field.
- Advisors must not define and sell strategy in terms that best suit their tactic. Ask yourself if you are selling or helping. Clients can tell.
- Optimal planning occurs when each focuses on their strengths and delegates the other parts.
- Clients and advisors often behave as adversaries. They should act together to deal with problems and opportunities.
- Think question before answer. Think diagnosis before treatment.
The ideal client relationship allocates tasks to the people best able to do them. Advisors do not decide strategy and clients choose amongst offered tactics. It will not work for long otherwise.
I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.
In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. don@moneyfyi.com 705-927-4770
moneyFYI 
a question if I may; concerning good questions, have you developed a short list of those pertaining to risk management considering the possible use of life insurance ‘s the optimal tactic
wwhat a timely piece Don
a younger colleague who works closely with me sspent a good hour last Friday morning discussing what we to as deeper questions getting into the psyche and the sometimes undiscussed unrevealed concerns of clients/prospects.
he is a big fan of Van Mueller who recently issued a 2 1/2 hour audio tape about this very topic of asking great questions.