When The Client Is In The Driver's Seat

I met a friend for breakfast this morning.  We ate at the Flying Biscuit.

He works for a large bank that is trying to build a presence in the Atlanta area, and we discussed what he does.  (He’s in business banking and helps companies with lending, cash management and more.)

Ultimately, we began discussing what I do for my clients and how it’s different from traditional financial advice.

As he began to grasp that my financial advice process is completely client-focused, I could see the wheels turning in his head.  At one point, he said something like, “So you don’t look at a person’s income and tell them they need to save 15-20% for retirement?”

And my reply?

I told him that would be completely backward for me to tell a client how much they need to save. 

First, I need to have a deep understanding of what’s important to the client and what their goals and objectives are.  Based on this very personal information, I might learn that the client needs to save a lot or that they don’t need to save much at all.  Or I could discover that the client really thinks it’s important to maximize their current lifestyle while still being prepared for the future.  This would indicate minimal desired savings.  Or what if the client has very little tolerance for investment risk?  Her resulting low allocation to stocks might dictate that she save more money to compensate for lower anticipated portfolio growth over time.

Now, as you read this, you might think to yourself that this sounds very logical and would be how clients would naturally interact with their financial advisor, but this is unfortunately the exception and not the rule.

And sure, it’s my job to give advice to help clients achieve what’s important to them, but I can never assume I know what’s important to someone else, and that’s the problem with most financial advisors delivering advice today.

In my experience, most advisors do a lot more talking than they do listening.  They bring many long-held biases to the table that will influence their advice including rules of thumb about how much someone should be saving for the future.  And they unnecessarily complicate the process for the client.  They assume your goal is getting the most out of your money, when in fact your goal might be getting the most out of your life.

If you or someone you know is dealing with an advisor that doesn’t clearly put the interests of the client first and foremost, then I suggest you immediately begin the search for someone that is happy to “hand you the wheel” and recognize that you’re in the driver’s seat — exactly where you should be.